Leadership Changes At Various Group Airlines Are A Sign Of Positive Change To Come For Lufthansa

Summary

• Deutsche Lufthansa AG announced major adjustments to the leadership of several of its airlines.
• This marks the beginning of a structural transformation which (if done according to plan) will see the company become a holding company with the individual airlines becoming more independent operationally.
• I believe this to be good news for shareholders, as it is likely to unlock considerable value.
• On top of that, a holding would also have advantages in the case of further acquisitions.
• An IPO of the highly profitable maintenance business might come on the table as well.

Deutsche Lufthansa AG (OTCQX:DLAKF;OTCQX:DLAKY) announced major adjustments to the leadership of several of its airlines. The announcement follows changes in the top tier of the group's senior management. This is not only a personnel change, but signifies the beginning of a transformational process. The company plans to transform itself into a holding under the roof of which the different airlines could operate with a higher degree of independence while the group level would have more of a coordinating role.

I believe that the implementation of such a structure has the potential to impact the valuation of the group in a positive way as it would not only make the value of its individual parts more visible but also better position it to create and unlock additional value in various ways. I will elaborate on my thesis below.

A Closer Look

First of all, one should take a closer look at the details of the leadership changes. The outgoing Brussels Airlines CEO Christina Foerster - who has been promoted to serve on the group level executive board - will be replaced by deputy CEO Dieter Vranckx. This is a rather unsurprising move. Bettina Volkens, the only female member of the company's executive board, is stepping down following her less than optimal handling of the conflict with the UFO trade union. For obvious reasons, it was of some importance to replace her with a woman and Christina Foerster is the obvious choice given her performance at Brussels Airlines. The appointment of her former deputy as new CEO demonstrates continuity. Other changes are more significant from an investor's point of view.

Maybe the most interesting appointment is that of Patrick Staudacher. From May 2020, the current BCG senior partner will be the CFO and head of business development of Lufthansa's eponymous core airline. His

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While I do not directly have a position in any mentioned stock, I do own Class B shares of Swire Pacific Ltd. which is a major shareholder of Cathay Pacific Airways Ltd.. Disclaimer: All research contained in this article was done with the utmost care. However, I cannot guarantee accuracy. Every reader is advised to conduct his or her own due diligence and research.