* Spohr named to replace Christoph Franz as CEO
* Lufthansa in middle of restructuring programme
* New boss to take up post on May 1
* Spohr says appointment is "honour and obligation"
* Lufthansa shares rise 1.2 percent
By Victoria Bryan and Maria Sheahan
FRANKFURT, Feb 7 Germany's Lufthansa
has picked Carsten Spohr as its new chief executive, naming a
company veteran to lead the battle against low-cost carriers and
fast-growing Gulf airlines.
Germany's largest airline has been looking for a new boss
since September, when it was announced current CEO Christoph
Franz would leave at the end of May to become chairman at Swiss
pharmaceuticals company Roche.
It said on Friday that Spohr, who has been head of the
carrier's passenger airline business since 2011 and had been
tipped to succeed Franz, will take up the post of CEO on May 1.
Shares in Lufthansa rose in response to the news, trading
1.2 percent higher at 17.62 euros by 1319 GMT and outperforming
a 0.2 percent gain by Germany's blue-chip DAX index.
"Spohr knows the business. He has shown that he is
well-connected and can restructure the group," said Ingo Speich,
a fund manager at Union Investment, which holds shares in
Like other European legacy carriers, Lufthansa is battling
competition from budget carriers Ryanair and easyJet
as well as Gulf airlines like Emirates, which are
expanding rapidly in the market for lucrative long-haul
Spohr, a 47-year-old native German from Wanne-Eickel in the
country's industrial heartland, will take over in the middle of
the SCORE restructuring programme, which aims to improve
operating profits to 2.3 billion euros ($3.1 billion) in 2015,
compared with 524 million in 2012.
Defining a new strategy for Lufthansa beyond the end of the
SCORE programme is seen as his biggest challenge.
"A solution must be found for how to compete with low-cost
carriers. And Lufthansa needs to try to create value for its
long-haul business from its route network, from alliances and
mergers," Union Investment's Speich said.
Some analysts say Lufthansa has been slow to react to new
rivals and enter growth markets, and will need a more decisive
strategy in future.
"They should have looked earlier at growth destinations,
such as India, where the Middle East carriers are now big, and
they should have updated their fleet earlier," said Euromonitor
analyst Nadejda Popova. "If you don't have a good fleet, how can
you penetrate new markets?"
She said the amount of time it had taken Lufthansa to decide
whether to introduce a premium economy section, like other
established carriers, indicated that management had been
confused. "They should take a decision and just go for it."
The new CEO will also have to grapple with recurring labour
disputes as Lufthansa, like other airlines, tries to squeeze
costs to compete in a fiercely competitive industry.
But Spohr said on Friday that he was convinced the airline
was on the right track and that he aimed to make it "resilient
and ready for the future also beyond 2015".
"As a Lufthansa man 'born and bred', I view the appointment
as the new CEO as both an honour and an obligation," said Spohr,
who holds a commercial pilot's licence to fly Airbus A320-family
Spohr worked his way up through the ranks to become the CEO
of Lufthansa Cargo in 2007. Four years later, he was promoted to
the group's management board to oversee its passenger airline
business, taking over from Franz.
Under him, the passenger airlines business has improved
results and seen the relaunch of low-cost unit Germanwings to
serve non-hub traffic within Europe. The passenger business
posted operating profit of 300 million euros in the first nine
months of 2013, almost triple the 111 million a year earlier.
Spohr, however, drew his share of wrath from workers over
the restructuring as the passenger airline business took the
biggest hit in terms of cost and job cuts.
His labour troubles are set to continue as pilots' union
Vereinigung Cockpit (VC) started balloting more than 5,000
Lufthansa pilots this week on whether to go on strike in a pay
Joerg Handwerg, a board member at VC, told Reuters that he
saw Spohr as a logical choice as new CEO because he had been
successful in his job and knew the company very well.
"However, we won't be giving him any premature praise. We
will have to sit down with him and talk matters over. For us,
Lufthansa has to make management credible and trustworthy and
they have to learn how to stick to their promises."