Following TCS and Accenture, this airline will now lay off 4,000 employees; 4,000 employees will lose their jobs.

Following the announcement of layoffs by IT giants TCS and Accenture, the aviation industry has now faced a major setback. Germany’s renowned airline group, Lufthansa, announced that it will lay off 4,000 employees at the administrative level by 2030. This move, taken in the name of promoting digitalization and automation, is worrying news for millions of employed people.

Why are the layoffs happening?

Lufthansa has faced persistent cost pressures and labor disputes over the past few years. Last year, the company issued two profit warnings and had to abandon its 8% operating margin target. However, Lufthansa has now prepared a roadmap to achieve that target, stating that it will achieve an 8-10% operating margin by the end of 2030. The company says that digitalization and automation will make operations easier and more cost-effective. Consequently, non-operational staff will be cut by up to 20%, with the majority of these employees affected in Germany.

Investor Confidence Increased

Despite the news of layoffs, investor confidence in Lufthansa has increased. The company’s shares rose by 2% in early trading on Monday. Lufthansa says these steps will enable the company to generate 2.5 billion euros (approximately Rs. 25,740 crores) of free cash flow annually.

More than 230 new aircraft will also be added.

Interestingly, while Lufthansa is planning to cut jobs, it has also announced the purchase of more than 230 new aircraft by 2030. This aims to increase the company’s profits and network. Lufthansa believes that better returns can be achieved by consolidating subsidiaries and shifting resources from high-cost divisions.

Part of a Turnaround Program

The company has clarified that both these layoffs and expansions are part of its turnaround program, which aims to reassure investors that Lufthansa is on a path to long-term stability and growth.