Eurowings Pauses Long-Haul Expansion

March 9, 2016

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Lufthansa's low-cost unit Eurowings will not make a decision on expanding its long-haul fleet until it improves an operation that has been beset by delays, a Lufthansa executive said.

Lufthansa wants to make Eurowings the third-largest low-cost carrier in Europe, behind Ryanair and easyJet, but its efforts to expand into long-haul, starting with two jets, stuttered when technical problems occurred and one of its flights to Cuba was delayed over 60 hours.

"We will discuss whether we want to go beyond more than seven planes when we have stability in the operation," Karl Ulrich Garnadt, a member of the Lufthansa board and head of Eurowings, said at the ITB Travel fair in Berlin.

He said the type of long-haul aircraft Eurowings is leasing, Airbus A330s, are readily available on the lease market so the airline could be flexible with its plans.

Eurowings, which mostly offers short-haul flights in Europe, had already delayed the start of some new long-haul destinations, such as Miami and Boston, and parent Lufthansa has been operating some routes on its behalf as it tries to resolve issues.

Garnadt said the carrier will also likely look at introducing Las Vegas as a destination next year, rather than this year.

Still, Garnadt said Eurowings was on course for its long-term business plan because its planes were fuller than expected and the carrier was benefitting from low oil prices.

With 20 million passengers expected this year, Eurowings still has some way to go to catch up with Ryanair, which carries over 100 million passengers annually. Eurowings is also hoping to grow by bringing other low-cost airlines into the group, but must first establish itself, Garnadt said.

The carrier has also seen some caution in bookings at the start of the year due to security fears dampening travel demand, especially after the Paris attacks, although Garnadt said bookings were now returning to more normal levels.

Eurowings is responding to increased competition in its home market by bringing down prices on domestic German routes and cutting some bag charges, it said.

"Of course we feel what Ryanair is doing. Customers are becoming more price sensitive, that's why we have to improve our cost position," Garnadt said.

(Reuters)