Lufthansa is axing long-haul operations at Eurowings as part of a restructure aimed at turning around the low-cost subsidiary.
The German carrier announced the change at its Capital Markets Day on Monday as part of “a comprehensive set of measures to turn around Eurowings”.
It said the loss-making carrier should be returned to profit as swiftly as possible with a clear focus on short-haul point-to-point operations and a 15 percent reduction in unit costs by 2022.
Eurowings posted an adjusted operating loss of 257 million euros in the first quarter as it faced stiff competition after last year absorbing parts of Air Berlin.
The airline’s long-haul flying will be transferred to the group’s network airlines — Lufthansa, Swiss and Austrian — and the Eurowings fleet will be modernized and standardized on the A320 family.
The integration of Eurowings and Brussels Airlines has also been halted and the latter will be more closely aligned with the network airlines.
Management will also tackle Eurowings’ complex flight operations by reducing it to single air operator’s certificate in Germany.
They also vowed to improve crew productivity, improve digital sales channels and unlock ancillary revenues.
Lufthansa also announced a dividend policy that would see 20 to 40 percent of the group’s net income regularly distributed to shareholders.
“With the airlines in our Group we are excellently positioned in our home markets, which are among the strongest in the world,” Lufthansa chief executive Carsten Spohr said in a statement on the group’s website.
“ We want to translate this market strength even more consistently into sustainable profitability and value creation.
“And it is to this end that we are presenting concrete actions today which will enhance our efficiency and generate value for our shareholders.
“Because we don’t just want to be Number One for our customers and our employees: we want to be the first choice for our shareholders, too.”