Lufthansa Close to Offloading Majority Share in IT Subsidiary

Lufthansa Group IT daughter company - Lufthansa Systems (LSY) has been the subject of much speculation as to its future following the decision in in 2005 to move its reservations functions to Amadeus ALTEA or the STAR Alliance Common IT platform.

With the loss of its anchor customer (parent Lufthansa and satellite airlines) for reservations – LSY embarked on an independent effort to replace its aging Unisys based platform known as Multi-Host with a new generation product based on Unisys’s Air Core Environment platform. However this project was abandoned and LSY never proceeded with any customers for the Unisys based system. You cannot find any current reference to this system called FACE on the LSY site but there are still historical references: http://www.lhsystems.com/resource/document/pdf/news/keydata_2004.pdf Instead the Frankfurt based company has concentrated on its line of Airline Solutions, Industry Solutions and Infrastructure Services.

There was much speculation that Lufthansa would want to align its IT services business with that of its part owned Amadeus company in which LH still retails a sizable share. The Financial Times and other news outlets are reporting that LH Group will offload the majority share in LSY. However it appears that the leading two contenders according to these news reports are TCS (India’s Tata Consultancy Services ) and IBM’s T&T Group .
The likely scenario is that the winning bidder will retain the name LH Systems but own a majority stake 51% leaving Big Yellow with 49%.

No Secret Any More - AC Cans Polaris PSS

The slow painful lack of progress with the Air Canada Reservations Project known as Polaris has come to a dead stop with AC writing off C$67 million. More importantly the depth of the work left to do was an astonishing C$40 million. This clearly indicates that the project was no where near done. Even if you discount a large amount of money for implementation, there is a clear indication that this project had some significant hills to climb to reach an "implementable" solution. Sadly ITA software is left without its anchor customer for what is a significant amount of their future revenue expectation.

And the big winner in all this?

Amadeus?

Once again carrying all before it - Amadeus is fast becoming the only game in town for large scale reservations systems PSS. ....Well maybe not.... Amadeus has many problems of its own with the UAL implementation not making any visible progress. There are now some pretty good alternatives for large scale legacy airlines.

Mature solutions are from: Mercator (the core system of Emirates and several other airlines), itself an adaptation of the old Swissair Atrraxis system.
SabreSonic (as deployed at AA and many other carriers) the latest iteration of the venerable system from Sabre.
Horizon (although I am sure that I will get flamed by SITA who think its a brand new system)
EDS-Shares - Continental, Virgin Atlantic and US Airways are the biggest users.

There are some good solutions at the lower level of LCC and simple carrier level - such as Navitaire New Skies and Results or TikSystems (Amadeus's newest best friend).

Still trying to make headway are Unisys's Air Core, and IBS's solution.

The market for PSSs remains in churn with some big contracts still up for grabs. Lufthansa's exit from the market has left a hole. The cooperation between UA and CO should be interesting and we will be keeping an eye on this. They might yet decide to go to something different away from Altea. For sure there are a lot of people making trips to Chicago and Houston!

Actually there is one certified winner in this. IBM who managed to stay behind the scenes and retain the value of their relationship with AC. Couple this with the recent outsourcing of many of QF's IT functions to the Software and Services Giant and the boys in Armonk must be smiling.

For the rest - stay tuned.