Lufthansa expands into the defense sector.

With the war in Ukraine, the military aircraft maintenance market is on the rise. German group bets on contracts with NATO.

Russia's long-lasting invasion of Ukraine is directly reflected in the military aircraft maintenance market. The industry heated up after the start of the war and is now looking for workers willing to supply the demand for specialists in the field.

Companies such as Germany's Lufthansa Technik (LHT), a subsidiary of the Lufthansa Group, which provides aircraft maintenance services, spare no effort in seeking to hire labor, even offering training to employees who come from other sectors. Most of these new specialists were previously active in the automotive industry, which has gradually shifted its focus to the production of electric vehicles.

"Lufthansa Technik is recruiting mechatronic engineers from the automotive sector," aviation expert Heinrich Gro?bongardt told DW. "They have a good background and are being retrained as aircraft mechanics."

With the war in Ukraine, billions of dollars in new aircraft are creating new business areas – or giving established companies a new boost for growth. This applies to Lufthansa Technik, which recently founded the LHT Defense subdivision.

According to the company's own data, the Lufthansa subsidiary serves more than 800 customers worldwide and has more than 20,000 employees.

Turning point for Lufthansa

"10 years ago this would have been almost unimaginable at Lufthansa Technik, let alone at the Lufthansa Group, considering the ESG ranking, which evaluates large companies in terms of sustainability," said Gro?bongardt. "Defense has always been, in fact, a no-go option."

For decades after the end of World War II and the collapse of the Nazi regime, any tie-up to the military was frowned upon in much of German society. Although German weapons technology was in demand abroad, it was always a controversial issue.

That changed with the start of Russia's war in Ukraine and the German government's announcement toinvest 100 billion euros to strengthen the German Armed Forces .

"Of course, we are also undergoing a re-evaluation here, which is why this is no longer a negative issue for the Lufthansa Group."

The first step involves the maintenance of five Boeing P-8 Poseidon maritime patrol aircraft, which the German Navy ordered at the end of June 2021. Along with the U.S., Australia, India, the U.K., Norway, South Korea and New Zealand, Germany is the eighth customer to put Boeing Poseidon into service this winter.

"These aircraft are essentially civilian Boeing 737s, i.e. completely normal commercial aircraft on which military systems have been installed," Gro?bongardt explains. And Lufthansa, he pointed out, has a lot of experience in maintaining this model.

"The question was asked right at the beginning: 'Who can do this in Germany? And there is no avoiding Lufthansa Technik, especially since it is already involved with the maintenance and refurbishment of aircraft for the German government."

It makes sense, he said, that the company does maintenance for the German Armed Forces (Bundeswehr) and Germany, adding that it would be much more expensive if the Bundeswehr had to build those capabilities from scratch and stock up on the necessary spare parts. "Lufthansa can simply use what it already has, and that also makes sense for the airline, as it ends up creating jobs in Hamburg."

Helicopters also on radar

In mid-May, German Defense Minister Boris Pistorius visited the American defense company Boeing in the United States, which, in addition to the order for the Poseidon naval aircraft, also sold 60 CH47-F Chinook heavy transport helicopters to Germany. Lufthansa also expects to offer its services for this model.

In addition, LHT intends to participate in the maintenance of the 35 F-35 stealth bombers ordered by the German Air Force from the American manufacturer Lockheed. The German company also sees business opportunities when NATO launches its AWACS radar aircraft for the new E-7 type in the coming years.

"Understanding and supporting new aircraft and their technologies in the shortest possible time has been part of our DNA for decades," LHT CEO S?ren Stark told the business newspaper Handelsblatt. "We could also carry out the modification of civilian Boeing 737s into NATO E-7 aircraft in Hamburg, in close coordination with Boeing."

Job creation in Germany

This new chapter for LHT offers a host of new vacancies and opportunities. This time, the new jobs will not be created at Lufthansa Technik sites in Malta, Bulgaria or the Philippines, but in Germany itself.

Applying for maintenance of NATO's new radar aircraft is also a smart move, according to Gro?bongardt. Here, too, LHT can make good use of its experience with a regular Boeing civilian jet. "The successor model, the E-7 Wedgetail, is based on the civilian Boeing 737. And once I've been able to enter the market, there's more potential in other NATO-related areas."

LHT CEO S?ren Stark has ambitious plans. Turnover is expected to increase from €6.5 billion to more than €10 billion by 2030. Profits are expected to rise from €630 million to more than €1 billion. While these goals are ambitious, they are not unrealistic.

Gro?bongardt thinks it unlikely that LHT will go beyond maintenance work for military aircraft technology and engines in the future. "Lufthansa Technik will never get into weapons technology as it has no experience in this area."

"Lufthansa Technik would then be the prime contractor and would take care of the engine and aircraft. And everything that has to do with weapons electronics, weapons and radar systems would be carried out by a partner," the expert said.By: Thomas Kohlmann