LTU Group Holding GmbH

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LTU Group Holding GmbH

Flughafen, Halle 8
D-40474 Dusseldorf
Germany
Telephone: (49) (211) 9418-888
Fax: (49) (211) 9418-881
Web site: http://www.ltu.de

Private Company
Incorporated: 1955 as Lufttransport-Union
Employees: 5,236
Sales: DM 3.97 billion ($2.02 billion) (1998–99)
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation; 72111 Hotels (Except Casino Hotels) and Motels

LTU Group Holding GmbH is Germany’s third-largest lei-sure travel tour operator and one of Europe’s leading charter airlines, assisting over 2.25 million customers with their travel needs annually. Based in Germany, the group consists of the airline LTU Lufttranspoitunternehmen GmbH, the organized travel group LTU Touristik GmbH (LTT), the catering company LTC, and the hotel group LTI International Hotels. The LTU Group also includes the Swiss-based LTU Destination Management AG and several incoming-agencies in Spain, the Dominican Republic, Mexico, and Thailand. LTU Lufttranspoitunternehmen GmbH is Germany’s third largest airline, with service from 12 airports in Germany, Salzburg, Austria, and Zurich, Switzerland, to over 70 destinations worldwide. LTI International Hotels owns 41 hotels in 13 countries with more than 22,700 beds. The catering company LTC, headquartered in Dusseldorf, with a subsidiary in Frankfurt/Main, provides over 22,000 meals daily to LTU and other airlines. The travel agency LTU Touristik oversees the operations of several travel agencies, including Meier’s Weltreisen, Tjaerborg, Jahr Reisen, Marlboro, THR Tours, and smile&fly. Swiss SAir Group owns a 49.9 percent stake in the LTU Group.

LTU Takes Off: 1955–63

When Germany regained sovereignty on May 5, 1955, ten years after World War II had ended, the country also regained sovereignty over its air space. Five months later German star architect Kurt Conle, who also had his own construction business, and his business partner Ernst-Jurgen Ahrens founded a new airline: the Lufttransport-Union. Soon thereafter, Ahrens became CEO of the Frankfurt/Main-based company and successfully led it through the first 20 years of its existence. LTU’s fleet consisted of one—and later three—British Viking aircraft with two motors and 36 seats. On March 2, 1956, the first LTU charter flight took off from Frankfurt. With 340 kilometers-an-hour maximum speed, the flight to the Italian island of Sicily took over eight hours. The Jungfernflug turned into an adventure for the 36 passengers when the machine was forced to stop in southern French harbor town of Marseille to be repaired. Right from the beginning, the Spanish island Palma de Mallorca turned out to be the German’s favorite holiday destination. By the end of its first year of operation, LTU served 58 destinations in Europe, Asia, and Africa.

In 1957 LTU’s fleet was upgraded with two more Vikings, an advanced version of the Britain’s Wellington Bomber. In addition, a Bristol 170 aircraft with 44 seats and a Douglas DC4 with 72 seats were purchased in 1958. LTU’s seating capacity more than doubled from 108 in 1956 to 260 two years later. When the European Economic Community (EEC) was founded in 1958, competition among airlines became fiercer. LTU’s airplane construction plants in Cologne won the German air force as a customer in the second half of the 1950s, after Germany’s NATO membership required the country to establish an air force. Another business segment for LTU was air transportation of such freight as newspapers, machinery, and livestock. When shipping magnate Aristotle Onassis, who owned his own airline, chartered an LTU Viking in 1960 for a medium distance flight, the machine was equipped in luxurious style. However, the VIP passenger was reportedly disappointed when LTU was not able to satisfy his desire for a Frankfurter sausage.

Because the company’s name was easily confused with another airline, it was renamed Lufttransport-Unternehmen in 1959. However, the company continued using the abbreviation LTU. In 1960 LTU moved its headquarters to Dusseldorf. A ruinous airline fare war broke out in the same year, causing a 30 percent decrease in flights and passenger count for LTU. The crisis year resulted in slimming LTU’s fleet and work force. However, the remaining 50 employees under the leadership of Ernst-Jürgen Ahrens were ready to take on the challenge. In 1962 LTU’s fleet consisted of only two machines, a Viking and a Fokker Friendship 27. However, the company consolidated its finances and the number of passengers began to rise again.

The Innovative Period: 1963–70

LTU’s early years, up until 1964, were characterized by CEO Ahrens as “the intuitive phase.” This was followed by a period of creativity in which new ideas put the company on its future success track, and Ahrens dubbed the era “the innovative period.” One of these ideas was to add organized travel pack-ages to LTU’s services. In 1964 the company founded its air travel subsidiary TRANSAIR. Five years later another LTU travel agency, THR TOURS, was founded. Its travel service Caravelle-Club offered LTU holiday charter flights as well as trips via scheduled flights to North America, Central Africa, and the Far East. Another subsidiary, the Interregionale FluggeselIschaft (IFG), was founded in 1968. IFG offered regional private charter and scheduled flights within Germany via some smaller aircraft of the German airline Lufthansa.

In 1966 LTU founder Kurt Conle died at age 48. The visionary had not only made his idea of affordable holiday flights for everyone come true under his motto “Fliegen ist fur alle da” — “Flight is for everybody,” but the socially-engaged entrepreneur had also helped build affordable housing as an architect and through his construction business. Conle’s place at LTU was taken by Wolfgang Krauss, who had already acted as a shareholder trustee for the company founder.

In the second half of the 1960s, LTU constantly upgraded its fleet. Two new aircraft, the French “Caravelle”, were added in 1967. That year the number of passengers LTU carried jumped to 250,000, a 40 percent increase over the year before. The air carrier conducted 7,577 flights to 20 destinations worldwide. To gain a competitive advantage over other airlines, LTU used only brand-new airplanes, and reduced the number of seats per air-craft to make the trip more comfortable. Bolstering its image as new and innovative, LTU flight attendants were dressed in the latest fashions. By 1970 LTU was the only airline that also offered fully organized travel service. The airline was popular among such high ranking German politicians as Willy Brandt and Hans-Dietrich Genscher.

LTU Flies High With Jumbo Jets: 1971–79

In 1971, LTU began offering scheduled flights to about 50 sunny destinations, in addition to its charter holiday flights. Two years later the company pioneered a new industry area when it became the first European charter airline to operate the wide-body airplane with two aisles, a Califoraian three-stream jet known as the Lockheed TriStar. Although two Fokker 28s were eliminated from its fleet, LTU’s capacity increased to 899 in 1973. However, for several reasons, the airline could not reap immediate results from this move. First, a strike by German air traffic controllers that lasted several weeks brought turmoil to the industry. Second, the oil crisis of 1973 and subsequent economic downturn was pushing costs up. Third, political un-rest and assassinations in several holiday travel regions had a devastating effect on the travel industry, causing industry-wide losses far into the year 1974. LTU reacted by putting the last two Fokker 28s out of service, cutting capacity back by 30 percent. Also during this time, IFG, the regional arm of LTU, filed for bankruptcy.

By 1975, the year LTU celebrated its 20th anniversary, the company’s fortunes were turning around again. LTU’s new TriStar jet achieved popularity as the “whispering giant” and was the first charter aircraft to meet the strict guidelines of the International Civil Aviation Organization (ICAO). In 1975 LTU invested in a second TriStar jet, which replaced one of the Caravelle aircraft. One year later LTU’s numbers soared again. That year, 770,000 passengers used the service of the airline— 200,000 or 25 percent more than in the year before. In 1977 LTU enlarged its fleet again with two more of the jumbo jets. All together the company now operated three Caravelles and four TriStars. New destinations were also added, including New York, the Bahamas, and Sri Lanka. On a sad note, 1975 also marked the year that CEO Ernst-Jürgen Ahrens died, leaving the company well on its way to becoming one of Europe’s leading airlines and travel businesses.

In 1977 LTU’s top management proclaimed three rules as basic to the company’s further success. The first was that LTU should never operate the same type of aircraft used by its competitors. Second, LTU should never give more than 20 percent of its capacity to a single travel agency. The third rule stated that business decisions should always be put into practice in big steps. In 1978 LTU invested in a fifth TriStar jet and got rid of its remaining Caravelles. As the first European charter airline to operate only wide-body jets with quiet engines, LTU received several awards.

Company Perspectives:

We are aware of the economic, ecological, and cultural risks that are connected with the quantitative growth of tourism. Within the framework of our ambitious goals, we admit to a responsible and constructive relationship to the society in which we live and of which we are apart. Wherever possible and appropriate, we will adjust our entrepreneurial actions accordingly. We are guided by the needs of our host coun-tries and advocate social and ecological awareness on the part of our employees. We engage in a constructive dialogue with public authorities and the public-at-large, and take seriously concerns about impacts on the environment. We encourage suggestions that address this goal and serve to protect the environment.

At the end of the 1970s, LTU’s passenger count had begun to rise again, reaching one million for the first time in 1978. That same year the exchange rate for the American dollar dropped below DM 2 for the first time and holiday trips to the United States and to the Far East came into reach for more people. In 1979 LTU offered a new chain-flight service for organized travel businesses with scheduled times and routes. On long distance flights, the airline offered a luxury First-Class Lounge area. By the end of the 1970s, 60 percent of all European flight passengers were tourists who used charter flight services, and intercontinental flights were in rising demand. In 1979, LTU gave financial support to the establishment of ABC Worldwide, which emerged as a recognized German travel agency chain.

Traveling Farther: 1980–86

In 1980 another travel agency chain, Meier’s Weltreisen, was established with a focus on marketing trips to locations farther away; LTU had invested in a long-distance aircraft for nonstop flights, the TriStar L-1011–500. One of the new desti-nations added to LTU’s schedule was Brazil. Another acquisition followed in 1981 when LTU bought a majority share in travel agency TJAEREBORG, the German subsidiary of a Danish travel agency with the same name. In 1982 LTU acquired the Munich-based travel firm JAHN-Reisen. As a result, the company’s revenues rose again, reaching DM 600 million for the first time in 1983.

In 1984 LTU founded another subsidiary, Lufttransport Sud (LTS). Like JAHN-Reisen, the new airline was based in Munich and served the southern German region, especially Bavaria. By 1986, LTU’s fleet consisted of nine wide-body TriStar jets with 3,000 seats. LTS flew the new Boeing 757, an aircraft for middle distance flights that was very advanced technologically and more environmentally friendly. The three Boeing 757s had a total capacity of 597 seats.

In the mid-1980s, as oil prices fell, the cost of jet fuel dropped by 30 percent compared to the early 1980s. This made trips to exotic, sunny locations, such as the Caribbean and the Far East, more affordable for Germans, and LTU’s business thrived.

The company was also gaining a worldwide reputation. LTU made headlines during this time when NASA officer O’Dwyer flew LTU to Germany, bringing with him some moon rock samples that were later displayed at the Herrman Oberth-Museum in Nuremberg/Fürth. In the same year, the island republic of the Maldives published a postal stamp with an LTU-TriStar its as major motif. In 1986, 92-year-old German professor Dr. Herman Oberth—regarded as the father of modern space travel—flew LTU to Washington, D.C., to an audience with then-president Ronald Reagan.

New Services and New Destinations: 1987–94

In the late 1980s and early 1990s, LTU continued to grow and expand into new markets. The planned liberalization of the European market posed a strategic challenge for the company’s upper management. They decided to expand into new markets such as catering and cruises, as well as to step up efforts to promote the company internationally.

In 1987 Munich-based subsidiary LTS was renamed LTUSud (LTU-South). The same year, the company’s first foreign airline subsidiary, LTE, was founded, with headquarters in Mallorca, Spain. One year later the company’s new catering subsidiary LTC was established. LTC operated from a new office building at the Dusseldorf airport and supplied food and duty-free products to several airlines with its own truck fleet. In 1990 LTU’s hotel subsidiary LTI took over a luxury cruise liner on the river Nile. It was an overwhelming success, and soon more ships were cruising the Nile under the LTI flag. In 1991 LTI was the first German business to invest in Cuba when the company took over the management of the first-class hotel LTI-Tuxpan on the beach of Varadero. In 1994 LTU established a new concern, Worldwide Destination Services, which offered contract management with local agencies for all LTU travel businesses.

At the same time the airline continuously expanded its reach and added new destinations. After the Berlin Wall fell in 1990, LTU charter flights began departing from Schonefeld airport in East Berlin to Palma de Mallorca. In 1990 LTU became a member of the International Air Transport Association (IATA) and started offering scheduled flights to four cities in the United States as well as domestic flights from Dusseldorf to Hamburg, Frankfurt, and Munich. In 1991 the company received the right to make scheduled flights to Thailand and began making three flights a week.

Another target area for LTU was the Caribbean. Beginning in 1991 LTU flew to Isla Margarita in Venezuela, Santo Domingo and Punta Cana in the Dominican Republic, and Holguin, Cuba. Another new path for LTU was its winter schedule with flights to Orlando, Florida, and Atlanta, Georgia, in the United States, Eilat in Israel, Rio de Janeiro in Brazil, Acapulco in Mexico, and San Jose in Costa Rica. Beginning in 1994, LTU also included Bali, Sumatra, and the Caribbean island Cura£ao in its roster. The winter schedule proved a success with 394 flights per week from nine German airports and Salzburg in Austria to about 70 destinations.

LTU made German headlines again when, on New Year’s Eve 1992, Germany’s public TV station, ARD, broadcast a live concert given by pianist Justus Frantz and a 53-piece orchestra on board LTU’s brand-new McDonnell Douglas MD11. That same year, 75 newly married couples started their honeymoons on a single LTU flight, all dressed in their wedding dresses and suits, the winners of a competition of German wedding photographers. In 1993 the first female captain, 36-year-old Sabine Trube, began flying a Boeing 767 for LTU. In 1993 the number of LTU passengers reached five million for the first time.

Key Dates:

1955:: The airline Lufttransport-Union is founded in Frankfurt/Main.
1956:: On March 2 the first 36 passengers fly LTU from Frankfurt to Sicily.
1961:: LTU moves headquarters to Dusseldorf.
1973:: For the first time LTU uses Lockheed TriStar jets.
1990:: LTU joins the international trade organization IATA and offers scheduled flights to the United States.
1998:: Swiss SAir group becomes major shareholder.
2000:: REWE group agrees to take over travel group LTU Touristik and 40 percent of LTU’s airline.

A Period of Reorganization: 1995–2000

By 1995 LTU had invested more than DM 1 billion in its fleet. Moreover, that year the airline invested in the new Airbus A330-300, the first airplane of its kind registered in Germany. Over the following years a total of six of these new airplanes with 387 seats gradually replaced the TriStar jets. By 2000 the airline flew about 7.2 million passengers in 29 aircraft to 70 destinations, with 96 percent of all flights scheduled. In 1996 LTU founded its first cargo office in Dusseldorf, followed by additional offices in Frankfurt, Munich, and Hamburg, which added a considerable stream of revenue.

However, in the second half of the 1990s LTU was challenged by problems with its reservation system, ruinous price competition, and deleterious analyst speculation. The company’s value declined suddenly, resulting in restructuring and cost reduction efforts. In 1996 LTU merged its travel agencies to form the tourism holding company LTU Touristik GmbH (LTT); all brand names of the former travel agency subsidiaries were kept under LTT’s corporate umbrella. In November 1998 Swiss SAirGroup, parent company of Switzerland’s airline Swissair, became LTU’s new majority shareholder. SAirGroup bought a 49.9 percent stake in LTU from Westdeutsche Landesbank and four private shareholders and then transferred it to the new holding company LTU Group Holding. By 1999 LTU was Germany’s number three airline and the country’s third largest leisure travel tour operator. However, the latter segment of the operation was deeply in the red. At the end of 1999 LTU announced a rigorous cost-cutting program called “Fit for the Future,” which was followed by one even more rigorous three months later. The program aimed at cutting personnel cost by ten percent and reducing passenger capacity by 20 percent, as well as taking advantage of synergy between LTU and SAirGroup. In 2000 German Rewe Group agreed to take over LTU’s organized travel arm (LTT) and to buy 40 percent of the airline’s capital (Rewe, Germany’s giant grocery retailer, had ventured into tourism beginning in the early 1990s.) The deal was subject to approval of several groups and authorities. Whether LTU’s efforts to streamline and better manage its holdings would prove successful or not would be answered in the 21st century.

Principal Subsidiaries

LTU Lufttransport-Unternehmen GmbH; LTU Touristik GmbH; LTI Hotelbeteiligungs- und Investitionsgesellschaft mbH; LTU Destination Management AG; LTC Catering GmbH; LTU Aircraft Maintenance GmbH; LTU Aviation Handling GmbH; LTE Fluggesellschaft (Spain); RAS FluggeselIschaft m.b.H.