It is ironic that two of Europe's airline success stories, British Airways and Lufthansa, are embarking on aggressive new cost-cutting programmes at a time when many of the money-losing carriers are still struggling to get their first-generation programmes in place.
BA and Lufthansa are performing well, but not well enough. At the peak of the business cycle - in other words, now - carriers need to be earning substantial returns to enable them to invest in new equipment and survive leaner years. At the same time, competition from start- ups is intensifying. So launching a cost-cutting programme during a time of record profitability is logical.
This is bad news for carriers like Air France, Alitalia, Sabena and Iberia. They are still losing money heavily, despite the industry upturn and, for many, state aid handouts. As the profitable airlines cut their own costs further, the gap between them and their money-losing competitors will widen further still.
Source: Airline Business