Deutsche Lufthansa AG slipped to a €112 million (£100 million) loss in 2009, as the global airline industry struggled to cut capacity in the face of falling demand.

The loss at the Cologne-based company compared with a net profit of €542 million (£490 million) for the financial year 2008.

Europe’s largest airline by sales also confirmed operating profit fell by 90 per cent to €130 million (£117 million) from €1.3 billion (£1.17 billion) in 2008.

In response, the executive board has proposed not to distribute a dividend for the financial year 2009.

However, following what the airline termed “a difficult financial year”, there have been successes.

Lufthansa increased its third quarter earnings following the inclusion of acquisitions such as Austrian Airlines and British Midland in the results, while an alliance with Austria Airlines is also expected to pay dividend.

Lufthansa also owns or holds stakes in other airlines; including Swiss International Airlines, Brussels Airlines and JetBlue.

Following the announcement Lufthansa rose 3.6 per cent to €11.50 in Frankfurt trading, the biggest gain since August 21.

However, the stock has fallen 2.1 per cent so far in 2010.

Lufthansa has outlined plans to reduce annual costs by €1billion euros by the end of 2011; with a 20 per cent reduction in the workforce planned. The plan has caused friction with its workforce.

Strike Action

The airline was able to curtail an industrial dispute with pilots late last month, with officials at Vereinigung Cockpit (VC), the pilots’ trade union, calling off a planned four day strike after just 24 hours.

The union has agreed to resume talks with airline representatives following the walkout, which saw hundreds of flights grounded in the last week of February.

The German flag-carrier is expected to release detailed fourth quarter figures with its full 2009 earnings on March 11th.