Lufthansa has said its earnings will decline considerably more in 2009 than expected just a month ago, and “substantially below” 2008 figures. But the German flag carrier said despite the slump, it remains confident of beating rivals’ earnings performance this year as it cuts back on spending.
Speaking at Lufthansa’s AGM, CEO Wolfgang Mayrhuber said “Our goal is to remain profitable. Our major competitors are forecasting losses.” Cologne-based Lufthansa earned net income of €599m and an operating profit of €1.35bn on sales of €24.9bn in 2008.
Mayrhuber painted a bleak outlook for its cargo division, which reported operating profit of €164m in 2008 but is forecast to make a loss this year. The division outlined plans in March to reduce employees’ hours and grounding some planes.
“It is apparent that the market will remain at this extremely low level,” he said.
The carrier also said it would be undertaking a major restructure in June with the creation of a new division for Lufthansa Passenger Airlines. This will be headed by Christoph Franz, currently CEO Swiss International Air Lines AG, who has been appointed to the Lufthansa Executive Board as well as its Deputy Chairman. He will also take over as Chairman of the Lufthansa Passenger Airlines Board.
The Aviation Services and Human Resources division will evolve into the new division Group Airlines and Corporate Human Resources, responsible for the group airlines outside of Lufthansa Passenger Airlines.
Cologne-based Lufthansa is also buying state-controlled Austrian Airlines and Brussels Airlines, aiming to expand its network of intercontinental hubs in Europe after the 2007 takeover of Swiss International Air Lines Ltd. However European Union regulators are still reviewing both take-overs.
“Once we have successfully mastered all of the obstacles, our position in and for Europe will be stronger,” Mayrhuber said. “The further consolidation of airlines in Europe is a prerequisite in order to be able to succeed in global competition.”