Lufthansa reports surging profits

Lufthansa reports surging profits

Europe’s biggest airline, Lufthansa, has reported a bigger-than-expected profit for 2010, on the back of resurgent long-haul traffic and a cost-cutting programme.

The German carrier recorded a net profit of €1.1bn, up from a loss of €34m in 2009, and twice analyst expectations.

It warned that 2011 is expected to be a tough year due to high fuel prices and a new German air-traffic tax, although it still expected its revenues and earnings to “develop positively” this year and next year.

Chairman and CEO Christoph Franz said: “We can be highly satisfied with this result; it shows that we have learned from the crises of the past.

But looking ahead, he added: “2011 will not be a walk in the park. The headwinds of competition are becoming rougher on the European routes and long-haul routes to Asia and the Americas. The German air traffic tax hits the German and European airlines, as well as their passengers, where it hurts.

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“The fuel prices are at record levels. And we are not immune to the consequences of political unrest, terrorist attacks and natural disasters.”

The airline also announced plans to pay a dividend for 2010 of €0.6 per share, which was also bigger than expected.

The figures were boosted by a strong recovery in the second half of the year, following a loss in the first half due to the volcanic ash cloud in Iceland and a pilots’ strike.

Lufthansa is still in the process of integrating two recent acquisitions - Austrian Airlines and UK carrier BMI.

It also has plans for a joint venture with All Nippon Airways, but has now warned that last week’s earthquake and tsunami in Japan may delay the tie-up.

Lufthansa itself achieved an operating profit of €382 million, compared to a loss of €107 million in 2009.

Bmi, Lufthansa’s fully-owned subsidiary, recorded an operating loss of €145 million and Austrian Airlines €66 million.