Lufthansa shrinks premium cabins amid 1% capacity growth

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Lufthansa plans to cut back business class capacity while the German airline group's overall capacity is to grow by 1% in 2013, with a clear focus on long-haul routes.

The group - comprising Lufthansa's passenger arm, Austrian Airlines and Swiss International Air Lines - will grow ASK capacity on long-haul routes by 2.9% in 2013. But short-haul capacity is to be cut by 2.6%, resulting in a 1% net capacity increase.

"The fleet will not grow significantly this year or in the years to come," said Simone Menne, chief financial officer, at the company's annual press conference in Frankfurt on 14 March. The 1% capacity increase will be achieved "almost entirely" through more seats per aircraft and greater aircraft utilisation.

In 2012, the airline group's combined ASK grew by 0.6%, while revenue passenger kilometres were up 2.2% compared with the previous year. Load factor was up 1.2 percentage points to 78.8%, as the number of flights was cut by 1.4%.

Menne says that Lufthansa's passenger arm will reduce business class capacity across its intercontinental fleet, opting instead to install extra economy class seats.

The carrier introduced a new business class seat last year, and it has now also revealed plans to introduce a premium economy class.

About one quarter of Lufthansa's intercontinental aircraft have thus far been equipped with the new full-flat business class seats.

Christoph Franz, group chief executive, says that the cabin upgrade will cost the carrier around €1 million ($1.3 million) per day until its planned completion in 2015.

He adds that a number of the new business class seats are installed as "quick change" equipment, which can be replaced with economy class seats overnight to accommodate seasonal fluctuations in passenger demand.