Thorsten Dirks probably has the most exciting job in Lufthansa Group right now. He is tasked with establishing the new Eurowings division at an incredible speed. As the former CEO of Telefónica Germany, he is expected to support the company’s digitalization.
Süddeutsche Zeitung: Mr. Dirks, are you a fast learner?
Thorsten Dirks: I think I am, but in the past year, I wouldn’t have had another choice. My aviation learning curve in the first months was pretty steep. After the Air Berlin insolvency, everything had to happen a little more quickly.
SZ: But you did get the often-referenced 100 days to settle into the job.
Dirks: Well, the first 100 days ended on August 10, 2017. Air Berlin announced its insolvency on August 15. That was a total of five days until the biggest insolvency in European aviation.
SZ: Lufthansa got you on board to expedite digitalization. But due to Air Berlin and the aftermath, the opposite happened. You initially had to assume a very traditional role to fill the gap left by Air Berlin.
Dirks: My primary goal in coming to Eurowings was to promote the European expansion of Eurowings. But you’re right: A lot of things came together in the last year – that makes the job at Eurowings highly fascinating and challenging. This is my third professional life. After 12 years with the German Air Force and almost 25 years in telecommunications, I made a conscious choice last year to make another change.
SZ: What was particularly surprising about your new professional environment?
Dirks: I have never before experienced an industry that is as emotional as that of the airlines. And I have never experienced a business sector in which unions have so much influence. At some point I just stopped counting how many collective wage agreements we renegotiated in just one year.
SZ: You joined a very conservative industry that doesn’t take easily to change. Why is that?
Dirks: Most of all, I noticed that telecommunications is more advanced in some areas – for instance in how customer communication is handled, and which systems and processes are involved behind the scenes. If someone calls a Telefónica call center today, the agent knows who is calling before the conversation begins. They have the customer’s entire contact history on their screen and may already be prepared for likely questions. Airlines have a lot of catching up to do when it comes to this type of customer communication. The thinking here is still based on the production perspective – very often, the airplane comes first, then the customer.
SZ: And how far is Eurowings?
Dirks: We’re on the right path. In the past, a flight booking was the cornerstone of every travel plan. Nowadays, customers increasingly plan their journeys based on a particular experience. They don’t book Madrid because of a flight, after all, but because of a sports event or an art exhibit that is on display there. If they allow that access to their data, we should know before they do that they are art lovers and that there will be a very interesting show in Madrid soon. This allows us to put together a suitable travel package for customers – with flight, hotel, rental car and other elements that they would like to have organized by a single provider.
SZ: And you’ll be able to do that better than Google?
Dirks: Our aim is to consistently simplify travel and make us a good digital travel companion.If we don’t do it, I guarantee that others will – maybe even Google.
SZ: But you aren’t that far yet.
Dirks: No, of course not. But I have to be able to put into words what our goals are, where Eurowings is supposed to be in three or five years. And I have to explain what has to be done today to make this goal achievable. We have the courage to resolutely change Eurowings – away from the classic airline model to a growing digital platform with associated flight operations.
SZ: Will you also be telling me which restaurants in Madrid are good?
Dirks: We’re not going to start hiring restaurant testers, but this kind of recommendation would be possible through a partner, absolutely. In the end, the question is who will do the best job of organizing the entire travel experience. We have to aspire to offer all these services ourselves.
SZ: With Lufthansa, you joined a company that has always believed that they know best how things are going and don’t want anyone new telling them what to do.
Dirks: That may be the case here and there, but it isn’t a defining element of Lufthansa. And to be honest, even if it were – Lufthansa hasn’t done badly with it in the past. But European air traffic is facing major challenges, and we are reacting to it with fresh momentum. And this fear of new impulses that you mention doesn’t apply to Eurowings. In Summer 2017, we launched a strategy campus, completely independent, outside the administrative structures and with cross-hierarchical, international teams. And we developed an audacious forward-looking program for the central topics of strategy, customer, cost and corporate culture. After six weeks ‘on campus’, we had made all the important decisions.
SZ: Lufthansa has the idiosyncrasy of not granting its subsidiaries very much freedom. Germanwings started out as a low-cost carrier and became more and more Lufthansa over time.
Dirks: That is definitely a thing of the past. It already changed in early 2016 with the new Eurowings brand identity.
SZ: But it isn’t clear what Eurowings actually wants. It wants to be less expensive than Lufthansa, but it offers a Business Class. And Brussels Airlines recently joined the fold, even though that is not an intuitive fit. One gets the impression that Eurowings is a catch-all for everything that doesn’t fit the classic Lufthansa model. And you have to make it work somehow.
Dirks: (laughs) Thank you for your sympathies, but I find this consolidation work very exciting. No airline in Europe is growing more quickly than Eurowings right now. And there is a clear, overarching strategy for this growth strategy.
SZ: And that would be?
Dirks: Most major airlines only have a single hub. With Frankfurt, Munich, Vienna and Zürich, Lufthansa Group has four. This ‘multi-hubbing’ gives us a lot of flexibility for our decisions. We can grow where the overall conditions are right. The transfer of five A380 aircraft from Frankfurt to Munich shows this. Customers from Hamburg don’t care whether they transfer to long-haul in Frankfurt or Munich. Eurowings is clearly separate form the operations of the network airlines Lufthansa, Swiss and Austrian. It is an increasingly strong and swiftly growing second pillar of Lufthansa Group.
SZ: And what does Eurowings do?
Dirks: We are focused on direct flights, i.e. the fastest-growing segment worldwide. I have no problem accepting that we are often described as a low-cost platform. But the actual difference is not between inexpensive and costly – it lies in the different business models: At Eurowings, we fly directly from A to B, while the hub airlines fly from A to C via B. Of course we purchase planes and fuel together. And we coordinate our schedules for similar connections, in order to ensure that Austrian and Eurowings aren’t both flying from Stuttgart to Vienna at 8:10 a.m. But otherwise, the development of Eurowings is strictly separate.
SZ: You are currently doing something very unusual for a low-fare airline by introducing a business class. Isn’t that rather risky?
Dirks: I have to disagree. Eurowings isn’t low-fare. We want to be as affordable as possible, but at the end of the day we want to offer the best price-performance ratio and an attractive service – so the “low-fare” stamp doesn’t really fit, while our newly developed “BIZclass” is a very good fit for us. We intentionally only offer it on a few selected long-haul routes. If there is high demand for a little more comfort at a strong business location like Düsseldorf, why shouldn’t we meet this demand on flights to New York, Miami, or Fort Myers?
SZ: Since the Air Berlin insolvency, Eurowings has been trying to get as big a piece of the pie as possible. Considering the difficulties in day-to-day operations, one does occasionally wonder whether the company isn’t overdoing it.
Dirks: Certainly not. We were presented with the unique opportunity to rapidly grow with Eurowings and position the brand much more strongly. We consistently seized this opportunity. However, nobody involved could have foreseen all of the steps, and I’m sure that today it would never go the way that it did. Looking back, we would surely do a few things differently today.
SZ: Weren’t the capacity targets simply too high? You had to rent a lot of aircraft from other providers, many of your own aircraft had to be retrofitted, and all of that cost you a great deal of money.
Dirks: It was clear that there was going to be an exceptional situation after the Air Berlin insolvency. Never before has an airline of that size left the European market. We bought or leased 77 aircraft from lessors and hired more than 2,000 new staff for Eurowings in just a few months. We had recruiting tents where people walked in one side with their documents and left on the other side with signed employment contracts. For several weeks, there was not even enough fabric in the market for new Eurowings uniforms. At times, we were training 200 new cabin crew members every week. Now, you may say that the targets we set for ourselves were too ambitious. But what else should we have done? Take-off and landing times at strategically important airports are a scarce commodity, and we had to secure them before our competitors beat us to the punch. I need planes and personnel to do that.
SZ: Eurowings recorded losses of more than 200 million euros in the first quarter.
Dirks: Eurowings clearly proved last year that we are capable of operating our flights profitably. Profitability is indispensable for sustainable management and, in that sense, this transitional phase is causing me almost physical pain. But we decided to prioritize rapid growth over profitability during this exceptional phase.
SZ: We have had repeated reports from Italy that Lufthansa is allegedly interested in Alitalia.
Dirks: Perhaps we need to emphasize this more clearly than in the past: Alitalia is not of interest to us in the current structure.
SZ: What about Norwegian? IAG bought a share and Bjørn Kjos, the CEO of Norwegian Air, says there are other interested parties.
Dirks: The European aviation industry is only at the beginning of a long overdue consolidation, so we will see more of that. We have grown Eurowings quickly and strongly, and now we need some time to integrate and harmonize our flight operations.
SZ: So it’s just bad timing?
Dirks: I’m fairly certain that we will have just as many opportunities one year from now. I don’t want to rule anything out, but I repeat: We currently do not have any more acquisitions on our list.
SZ: Do you enjoy flying as a passenger?
Dirks: Yes, I still do. I still find flying fascinating. There’s a reason I spent 12 years in the German Air Force. But you know what’s funny? Since I have been working at Lufthansa and Eurowings, I actually fly less than before.