Lufthansa acted quickly to adopt US safety rules requiring two people to be in the cockpit at all times following the Germanwings tragedy
 
Carsten Spohr looked shell-shocked as he faced the press in Cologne last week. The normally self-confident Lufthansa chief executive, who holds a commercial pilot’s licence, was beginning to comprehend the news that an employee at subsidiary Germanwings appeared to have deliberately flown a plane into a mountainside.
 
Having seen how twin tragedies at Malaysia Airlines led to a collapse in passenger confidence and bookings, Mr Spohr, 48, must be aware that how he responds to this disaster could define Lufthansa’s image for years to come.
 
The storied German flag carrier — the biggest aviation group by revenues in Europe — was due to mark its 60th anniversary in April. Now, the celebrations are cancelled and employees will instead watch the broadcast of a memorial service for the victims of the crash, in which all 150 people onboard died.
 
Mr Spohr, pictured below, was quick to pledge up to €50,000 in immediate financial support for each victim’s family and Lufthansa’s insurers have put aside $300m to cover all the crash-related costs, including compensation for next of kin.
 
But as he said at last week’s press conference, the immediate financial costs are one of his least concerns. Far more serious are the potential risks to Lufthansa’s reputation.
 
Mr Spohr has mostly been sure-footed in his public appearances, seeking to portray the tragedy as a freak incident that could have happened to any airline. “I have complete trust in our pilots...They remain the best in the world,” he said last week.
Nevertheless Lufthansa did not wait long before announcing that it would adopt US safety rules requiring two people to be in the cockpit at all times — a measure not in force in Europe.
 
Heinrich Grossbongardt, a Hamburg-based expert in aviation and crisis management says: “I’ve been rather impressed with how [Mr Spohr] has handled this terrible situation...He showed he was really affected by what happened and that helps strengthen confidence in an airline.”
 
But Lufthansa has been criticised for its apparent ignorance of co-pilot Andreas Lubitz’s previous history of severe depression — a problem that worsened on Tuesday when the airline conceded that Lubitz had told its pilot training school about his condition in an email.

Lufthansa can ill-afford that kind of bad press as safety is the cornerstone of its brand. “They are potentially vulnerable in the short term to the as yet unproven allegation that something went wrong in pilot selection and care," says Mr Grossbongardt.
 
Even before last week’s horror, that reputation for reliability had taken a knock. As a result of 15 days of strikes, Lufthansa had to cancel 8,600 flights last year at a cost of €222m, about half of which the airline attributed to lost future bookings.
 
In the week before the Alps crash, pilots had gone on strike for an additional four days in a row. Management wrote to customers to apologise.
 
Lufthansa does not yet know whether the strikes will have a long-term affect, nor has the airline published any data on bookings in the wake of the crash. But the company — which spans the no-frills Germanwings and Eurowings carriers plus cargo, maintenance and catering units — last year fell to a €732m net loss under German accounting rules. Net debt doubled to €3.4bn and it was forced to scrap its dividend for the second time in three years.
 
This loss partly reflected higher pension liabilities but Lufthansa’s chief problem remains tough competition. Having underestimated the challenge from budget carriers Ryanair and easyJet, it finds itself being undercut on long-haul routes to Asia by the Gulf carriers.
 
Lufthansa hoped a cost-cutting plan that included shedding 3,500 administrative jobs (3 per cent of group headcount) would help transform its fortunes. But while the programme led to a €2.5bn gross improvement in Lufthansa’s results between 2012 and 2014, those savings were eaten up by cost inflation and lower fares.
 
With revenues stagnating, the airline has frozen the size of its fleet, even as the world aviation market continues to grow. “Our most important priority, apart from safety, is our future viability,” Mr Spohr told shareholders last month, before the crash.

Handling such crises would be a challenge for any chief executive. But Mr Spohr has held the job for less than a year and, though a pilot by training, his relations with cockpit personnel are badly strained. The pilot strikes were ostensibly about early retirement rules but their underlying cause can be summed up in one word: Eurowings.
 
Mr Spohr’s strategy involves expanding Lufthansa’s little-known, low-cost sub-brand on short-haul journeys in Europe, as well as long-haul leisure travel routes. Eurowings is not bound by collective wage agreements, meaning its operating costs are about 20 per cent below the no-frills Germanwings brand, whose costs are in turn about 20 per cent lower than at the premium Lufthansa airline.
 
Germanwings, which has taken over all short-haul services that do not serve the Munich and Frankfurt hubs, is set to be absorbed under the Eurowings umbrella brand. 
 
For now, though, both management and the pilots’ union agree it is the wrong time to talk about strategy. No more strikes are likely in the short term as the airline seeks to present a united front and do what it can for the victims’ families.
 
Joerg Handwerg, spokesman for the Vereinigung Cockpit pilots’ union, says: “We are one company and our top priority remains bringing people safely from A to B?.?.?.?Everybody is focused on the tragedy right now and there is no mood for conflict?.?.?.?We don’t see a connection between the low-cost strategy and what’s happened.”
 
Mr Grossbongardt, the aviation expert, believes the crisis may ultimately help the company achieve a resolution: “Its employees have a deep sense of identification with Lufthansa,” he says. “I’m sure the way these internal conflicts are handled — in particular how people talk to one another — will now change.”
 
Rival cautions against knee-jerk measures
 
Rushing to change pilot screening procedures after a Germanwings employee appeared to intentionally crash a plane would be a mistake, says the boss of Europe’s second-biggest low-cost airline, writes Jane Wild.
 
Carolyn McCall, chief executive of easyJet, pictured, said this week: “Every airline will be looking at what they could do to improve visibility about the mental health of pilots?.?.?.?knee-jerk reactions are not a good idea.”
 
 
Regulators and pilots unions agree, and have suggested that while French authorities investigate the causes of the crash last Tuesday, it would be too soon change pilot health screening procedures.
 
They stress that, in addition to conducting annual medical checks, which include an assessment of mental health, the airlines encourage pilots’ colleagues to report any concerns about fellow employees.
 
Training programmes involve scrutiny, too, Ms McCall said. “You’re watched all the time, you’re line checked, the base captain is looking over you and you’re visible,” she explained.
However, the industry is focusing attention on improving the current checks and ICAO, the international airlines body, has repeated its assertion that more could be done to look into pilots’ psychological state.
Airlines are currently in discussions with ICAO about new measures, although their talks will not conclude until after the accident investigators make their report.
 
Geert Sciot, communications manager at the Association of European Airlines, said: “Can we exclude this [type of event] 100 per cent? Most airlines say ‘no’. But we can learn lessons out of what happened, like with all air accidents.”
 
With any changes yet to be defined, the additional cost to the airlines is not clear. But the Germanwings incident is likely to have resulted in reduced flight bookings, at least in the short term, said Ms McCall. “What you always see after an event is that people will hold back from booking,” she explained.（Chris Bryant in Munich）