Lufthansa faces new challenges - Increased dividend of €0.60 proposed
Lufthansa`s realignment as an aviation group has proved to be a stabilising factor and an important step towards bolstering the company against cyclical fluctuations and other risks. 
In his address to the 48th Annual General Meeting in Cologne, Lufthansa Chairman and CEO Jürgen Weber said: “Our business results and our market position in all areas of our activities are proof of the market maturity and strength of the Lufthansa aviation group.” A dividend of €0.60 (previous year: €0.56) per share will therefore be proposed to shareholders. With an operating result of more than €1 billion in 2000, Luft-hansa outperformed its European competitors for the fourth year in succession. 

Lufthansa has reaffirmed its aim to secure the future success of the company in spite of a faltering economy in the US and Europe, rising staffing costs and a dramatic deterioration in air traffic control services. Weber expressed understanding for the strong public reaction to the arbitration ruling in the wake of the dispute with the pilots` union, Vereinigung Cockpit. He said the relentless manner in which action had been taken without any consideration for other groups of employees had certainly given him pause for thought. Despite the heavy financial burden Lufthansa had, however, agreed to the arbitration proposal because it contained innovative and viable approaches towards solving the problem, Weber said. “The settlement is a one-off event which cannot be repeated,” he added. The pay deal provides for a completely new remuneration system and links it more closely to the company`s performance. The agreement, which runs for an unusually long period of 39 months, would, he said, give the company more longer-term stability.

Weber was critical of the services provided by German air traffic control (DFS). Since the new structure of Germany`s air traffic corridors had gone into effect, the DFS had caused the greatest air traffic control delays Europe-wide on domestic routes in Germany. “The dramatic deterioration in air traffic control services which occurred literally overnight is costing us about €0.5 million a day,” Weber stressed, adding that he had suggested to the DFS that they sit down next month with the Federal Minister of Transport to work out a package of measures. Meanwhile, Lufthansa was conducting talks with the ministry on compensation for the delays caused by air traffic control.

In view of these factors the original forecast of an operating result on a par with that of the previous year was no longer attainable, Weber stressed. For 2001 Lufthansa expects an operating result of €700 - €750 million - not €1 billion as previously anticipated. This, Weber assured shareholders, was a realistic forecast of the company`s further business development. “The profit warning is a sign of openness, proof that we are communicating problems in good time and, I must add, also tackling them in good time,” Weber said.

Lufthansa will develop measures and strategies to bolster the company`s competitiveness and profitability. The aim of the D-Check programme, which was developed before the wage negotiations with the pilots` union, is to conduct a thorough overhaul of the aviation group in order to optimise processes and structures. In the next three years Lufthansa expects it to make an additional cash-flow contribution of €1 billion. Furthermore, the company will examine individual routes in terms of profitability.

Lufthansa, Jürgen Weber added confidently, was the best-positioned company in the aviation industry. “The name Lufthansa stands for a highly value-based group. Its corporate strength will support us in our efforts to master the challenges that lie ahead.”

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