* Analysts say too many brands could create complexity
* CEO says could not do low-cost under Lufthansa brand
* Unions welcome growth, rather than cuts
* Lufthansa shares down 4 pct
(Adds comments from unions in paragraphs 9 and 10)
BERLIN, July 10 Lufthansa's new chief
executive on Thursday defended the airline's plans to expand its
low-cost services under new brands, after some analysts
questioned the wisdom of such a move.
Carsten Spohr, who took over as CEO in May, presented plans
on Wednesday that include expanding low-cost services in Europe
and possibly on intercontinental flights, as well as grounding
eight planes this winter, to battle competition from Middle
Eastern and low-cost carriers.
Some analysts said, however, that plans to extend
Lufthansa's little-known Eurowings regional carrier could create
additional complexity at the group and highlighted how saturated
the low-cost market in Europe already was.
"The European low-cost market is starting to suffer from a
proliferation of operators and this development will only worsen
that situation," HSBC analysts wrote in a note.
Spohr said Lufthansa, Europe's largest airline by revenue,
needed to do more to lure price-sensitive travellers but would
risk losing higher-paying business customers if it did so under
its premium namesake brand.
"If you're on a Lufthansa product, you expect certain
elements. If I take them away I hurt my brand," he told a
gathering of analysts in London on Thursday.
Using a carrier such as Eurowings or even starting from
scratch, as Lufthansa would have to for low-cost long haul, also
allows Lufthansa to avoid collective labour agreements at its
Lufthansa and Germanwings units, he said. Eurowings operates at
a cost base about 20 percent below that of Germanwings.
"In the end it creates opportunities for staff. They won't
be as well paid as my Lufthansa A380 pilots but it's
opportunities for jobs," Spohr said, dismissing possible
concerns from labour unions.
Unions drew some comfort from Spohr's plans, while saying it
was too early for a definitive response.
UFO, which represents around 18,000 Lufthansa cabin crew,
said it was right to focus on growth and that the low-cost
segment represented an attractive market, while Verdi, the
German service union, said that the fact Lufthansa was talking
about expansion and not cost cuts was positive.
Spohr also rejected the idea that Lufthansa could buy a
low-cost airline such as Wizz rather than expanding a brand it
already owns. Eastern European Wizz recently pulled plans for an
initial public offering, and Air France earlier this
week denied it was in talks to buy the carrier.
After rising 1.4 percent on Wednesday, Lufthansa shares were
down more than 4 percent on Thursday, mirroring falls in other
Part of Spohr's plans is a new joint venture with Air China
to give Lufthansa a bigger foothold in China, the
world's second-largest travel market.
However, the partnership, in which the two airlines will
share ticket revenues on certain routes, may not be fully up and
running until 2016 as it will take some time to obtain
anti-trust approval, Spohr said.
He added that Lufthansa could ground more planes, on top of
the eight already planned, as a short-term measure to deal with
overcapacity, but said no decision had been taken yet.
(Reporting by Victoria Bryan; Additional reporting by Peter
Maushagen; Editing by Arno Schuetze/Ruth Pitchford)