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Lufthansa has struggled to turn around its core airline

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Smaller subsidiaries like Eurowings, Discover are helping

boost

growth

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CEO promises 2025 will see improvements

By Ilona Wissenbach and Joanna Plucinska

FRANKFURT, Sept 10 (Reuters) - Lufthansa group

is making progress with its turnaround plan, though 2025 and

2026 will be transitional years as it works to stem spiralling

costs, Chief Executive Carsten Spohr told reporters in

Frankfurt.

The airline group issued two profit warnings in 2024 as its

core airline struggled with spiralling costs and labour

disruptions while its more successful Eurowings continues to

grow.

"One thing is clear: the resulting performance has not been

good in recent years. That's why it was absolutely clear to us

that this year would remain another year of transition ... But

it is a year of transformation toward higher performance," Spohr

said.

"I believe I can also say that this turning point in 2025

has been achieved." Flight operations are more stable, with only

one percent of flight cancellations, and customer satisfaction

has increased as a result, he said late on Tuesday.

Last year Spohr promised to turn around the flag carrier by

2026 and launched a broad restructuring of the group in an

effort to get costs under control.

Spohr said Lufthansa will seek to integrate more closely

with other group members, including Swiss, Austrian and Brussels

Airlines to help streamline operations.

Cheaper operations at its newer subsidiaries City Airlines

and Discover are helping the group grow, he said.

"The cost disadvantage of the classic division, the core of

the core, is so great that the group's growth is currently

taking place elsewhere. We would like to be able to reduce these

costs," Spohr said.

Lufthansa's pilot union is threatening to strike as it calls

for adjustments to the airline's pension scheme.

Upcoming deliveries of new Airbus and Boeing ( BA )

aircraft are also set to help bolster growth, with 60 jets

expected by the end of 2026. The first Boeing 787 Dreamliner jet

with Lufthansa's luxury Allegris cabin was delivered this month.

Airlines have lamented how expensive it is to operate in

Germany for years, with Ryanair announcing earlier this

year that it would pull some of its operations due to high

airport charges.

Spohr said the group will have over 50% of its fleet based

outside of its core German hubs in Frankfurt and Munich as it

continues its takeover of Italian carrier ITA Airways and

expands its multi-hub model in places like Vienna and Brussels.

That could help the group better balance costs as it

continues to look to less expensive markets to grow.