More Lufthansa cuts as operating profits slump

More Lufthansa cuts as operating profits slump

Lufthansa suffered a 36% slump in operating profits last year and plans to suspend dividend payments.

The €524 million operating profit came against a backdrop of restructuring charges amounting to €160 million.

The partial transfer of Austrian Airlines’ flight operations to Tyrolean Airways had a positive one-off effect of €115 million on the operating result.

The sale of investments, including a stake in Amadeus, helped lift net profits to €990 million, compared to a loss of €13 million in 2011 – but the airline said attributed this to one-off disposals. Revenue rose 4.9% to €30.1 billion.

The airline’s Cologne head office, which houses 365 staff, is to be shut by the end of 2017 as part of on-going cost savings measures.

Back office functions across locations in Cologne, Norderstedt and Hamburg are to be pooled with at least 350 job losses. Eighty per cent of 200 administrative staff in Hamburg are to be transferred to a special service centre as part of efforts to cut worldwide staffing costs across its 118,000-strong workforce by €500 million.

Chairman and chief executive Christoph Franz said: “A net profit driven by one-off effects must not mislead us into disregarding the pressure to act.”

He said: “Profitability for an airline is not simply a given in the present industry environment, it is a good performance. In order to successfully meet the changes in the aviation industry, however, we need to perform even better.

“Only then can we create the necessary scope for the measures we need to take to shape the future of the Lufthansa Group ourselves.”

He admitted that the restructuring “requires us to make difficult decisions, which will have a deep impact on the everyday lives of our staff”.

But Franz added: The measures we are taking will enable us to create the basis for sustainable growth, employment and job security in the long term.”

The carrier has agreed to purchase 100 short-haul and eight long-haul aircraft, worth €9 billion for elivery between 2015 and 2025.

“Modern aircraft and state-of-the-art inflight products are an investment in the customer experience and in the operational efficiency of the fleet,” Franz said. “The greater fuel efficiency and lower noise and exhaust emissions of modern aircraft will also make an important contribution towards protecting the environment.”

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