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January 30, 2014updated Feb 18, 2014

Happy Trails

By Chris Boyle

christoph_franzSwiss drug maker Roche Holding AG announced today that its 2013 Net Profit was 11.4 billion Swiss Francs on revenues of 46.8 CHF, a profit margin of nearly 25%.

Just recently the International Air Transport Association announced the average profit for an airline ticket is $4.  Famously since the Wright Brothers lifted off from Kitty Hawk in 1903 the global airline industry has posted a net loss.  Outgoing Lufthansa CEO Christof Franz was in a very good mood during a press session this morning in New York.  Later this year he will he will become Chairman of Roche.

Franz spoke to a broad range of issues across Lufthansa Group.  In addition to its namesake airline, it owns Germanwings, Swiss, Brussels Airlines and Austrian Airlines plus a catering company (LSG Sky Chefs), a maintenance company (Lufthansa Technic) also known for its private jet interiors plus a host of subsidiaries.

The most relevant to elite travelers was what Franz said would be Lufthansa’s continued commitment to quality product and services.  The airline has been a leader in offering private jet service as well as an upscale first class product, particularly on the ground with its stand alone First Class Terminal in Frankfurt.  The Terminal concept, including private car transfers from lounge to plane, has been extended to its lounges in the main airport as well as Munich and the sophisticated design can be found in a number of worldwide lounges.

Of course Franz’s farewell visit to The Big Apple also enabled him to highlight some of the aviation industries regulatory challenges.  As examples new German government taxes have meant a $360 million hit to the carrier’s bottom line in an industry where margins are already thin.  Frankfurt Airport’s nightly six hour curfew he likened to closing The New Jersey Turnpike for three months a year in terms of cost and inconvenience.  Despite the heavy burden he said aviation in Germany employs over one million workers.

Among the bright spots Franz pointed that Lufthansa Group is one of what he said was only three ‘investment grade” airlines in the World (alongside Southwest Airlines and Air New Zealand) and Lufthansa Technic has created a new engine cleaning system that cuts fuel burn by one to two percent.  The airline has also heavily invested in new planes that provide not only a better experience but cut carbon emissions. He said the worldwide industry is responsible for less than three percent and has been aggressively trying to reduce even this footprint.

Despite all the penny pinching that is required for running an airline, Franz was able to celebrate Lufthansa becoming the only European airline to receive the Skytrax five-star rating for its First Class.  He noted good news is on the way for Business Class passengers as well as the airline is in the middle of a three year project to install new seats that convert to fully flat and horizontal beds.

Considering the pressure of running a profitable airline, perhaps some of Franz’s soon to be former industry colleagues will be keeping in touch.

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