By Lufthansa announced plans on Monday to reduce its global workforce by 4,000 full-time equivalent (FTE) roles by 2030, as part of a broader strategy to improve profitability and leverage artificial intelligence (AI) to drive efficiency.
The majority of the affected positions are expected to be administrative roles at the airline’s German headquarters.
The move underscores a growing trend among corporations using AI to streamline operations and reshape staffing models, following similar initiatives by tech and financial firms.
AI and digitalization drive workforce reductions
In a statement during its Capital Markets Day in Munich, Lufthansa said the company is reviewing activities that may no longer be necessary, often due to duplication of work or digitalization.
The release highlighted that AI will enhance efficiency across various processes, leading to reductions in staff requirements.
Lufthansa joins other companies citing AI as a factor in workforce restructuring.
Earlier this year, Klarna CEO Sebastian Siemiatkowski said AI helped reduce the company’s headcount by 40%, from 5,000 employees to nearly 3,000.
Salesforce also cut 4,000 customer support roles, with CEO Marc Benioff noting the company required fewer staff due to AI automation.
Tech consultancy Accenture has similarly announced plans to exit employees who cannot be retrained to work alongside AI.
CEO Julie Sweet described the strategy as investing in “upskilling our reinventors” while exiting others on a “compression timeline” when reskilling is not feasible.
Financial outlook and market reaction
Lufthansa’s stock rose 0.28% following the announcement. The company’s shares have gained 25% year-to-date.
UBS analysts noted that the airline’s new long-term targets should be viewed positively, as they exceed market expectations.
The company projects an adjusted operating margin of 8-10% by 2028, up from its previous target of 8%, and expects adjusted free cash flow of more than €2.5 billion ($2.9 billion) annually.
These targets come amid ongoing challenges in 2024, including staff strikes, increased global price competition, and aircraft delays.
Lufthansa reported that annual earnings before interest and taxes (EBIT) dropped 39% to €1.65 billion ($1.8 billion) last year, while the operating margin fell to 4.4%, below its strategic target of 8%.
The airline’s stock ended 2023 down 23%.
Broader implications for the industry
The decision reflects a wider corporate shift toward integrating AI in operational planning.
By focusing on administrative roles, Lufthansa aims to maintain operational capacity while reducing costs.
Analysts suggest that leveraging AI to increase efficiency could help the airline navigate industry pressures and enhance long-term profitability.
Investors and market watchers will closely monitor Lufthansa’s execution of these cuts and its AI initiatives.
With targeted margins and cash flow projections exceeding market expectations, the company appears confident that restructuring and technological upgrades can offset past operational challenges and position it for sustainable growth through the next decade.
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