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Prize winner
Published by: London Business School
Published in: 2001
Length: 33 pages
Data source: Field research

Abstract

In 1991 Lufthansa was almost bankrupt. Eight years later, at the general business meeting on 16 June 1999, Jurgen Weber (CEO), announced record results in Lufthansa's history that spanned more than 70 years. In eight years, the company had gone from the brink of bankruptcy to becoming one of the world's leading airline companies, a founding member of the STAR ALLIANCE - the airline industry's most comprehensive network - aspiring to become the leading aviation group in the world. Lufthansa had undergone some radical changes that reversed a record loss of DM730 million in 1992 to a record pre-tax profit of DM2.5 billion in 1998 (an increase of 42% compared to 1997 when the pre-tax profit was DM1.75 billion). Revenues increased by 4.8%, from DM21.6 billion in 1997, to DM22.7 billion in 1998. The Seat Load Factor (SLF - proportion of seats filled) reached 73%, a record performance in Lufthansa's history (1. 5 percentage points increase compared to 1997 and 9 percentage points increase compared to 1991). After the first step of the turnaround it was apparent that transformation had just begun and that a much more fundamental change had to follow to assure the company's future. The Lufthansa Executive Board (Vorstand) and the Supervisory Board (Aufsichtsrat) decided to follow a concept of sustaining renewal (redevelopment) at 3 levels; operational, structural, and strategic. In 1999, none of these processes were fully completed. In fact, sustaining the change process was seen as the key management challenge.

Teaching and learning

This item is suitable for postgraduate and executive education courses.

Time period

The events covered by this case took place in 1991-2000.

Geographical setting

Region:
Europe
Country:
Germany

Featured company

Lufthansa
Industry:
Airline

Featured protagonist

  • Jürgen Weber (male), CEO

About

Abstract

In 1991 Lufthansa was almost bankrupt. Eight years later, at the general business meeting on 16 June 1999, Jurgen Weber (CEO), announced record results in Lufthansa's history that spanned more than 70 years. In eight years, the company had gone from the brink of bankruptcy to becoming one of the world's leading airline companies, a founding member of the STAR ALLIANCE - the airline industry's most comprehensive network - aspiring to become the leading aviation group in the world. Lufthansa had undergone some radical changes that reversed a record loss of DM730 million in 1992 to a record pre-tax profit of DM2.5 billion in 1998 (an increase of 42% compared to 1997 when the pre-tax profit was DM1.75 billion). Revenues increased by 4.8%, from DM21.6 billion in 1997, to DM22.7 billion in 1998. The Seat Load Factor (SLF - proportion of seats filled) reached 73%, a record performance in Lufthansa's history (1. 5 percentage points increase compared to 1997 and 9 percentage points increase compared to 1991). After the first step of the turnaround it was apparent that transformation had just begun and that a much more fundamental change had to follow to assure the company's future. The Lufthansa Executive Board (Vorstand) and the Supervisory Board (Aufsichtsrat) decided to follow a concept of sustaining renewal (redevelopment) at 3 levels; operational, structural, and strategic. In 1999, none of these processes were fully completed. In fact, sustaining the change process was seen as the key management challenge.

Teaching and learning

This item is suitable for postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in 1991-2000.

Geographical setting

Region:
Europe
Country:
Germany

Featured company

Lufthansa
Industry:
Airline

Featured protagonist

  • Jürgen Weber (male), CEO

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