Lufthansa losses spur huge savings plan

Lufthansa losses spur huge savings plan
Photo: DPA
German airline Lufthansa is planning to lay off 20 percent of administrative employees as part of a massive programme to reduce costs by €1 billion each year, daily Handelsblatt reported on Thursday.

The programme, dubbed “Climb 2011,” is meant to reduce the cost of transport after the company reported major losses for the first quarter due to higher fuel costs and falling customer numbers.

“We aren’t earning our costs for the passengers this year,” head of passenger transport Christoph Franz told the paper in a written statement, adding that first-half earnings will continue to be negative. “In certain positions we will think over our business model and if necessary.”

The airline will cut one-fifth of “administrative services” for passengers – a part of the company that employs “a couple of hundred employees.”

Franz said that the financial pressure stems partly from the current economic climate and purchasing 160 new planes between 2008 and 2014 – an investment of some €16 billion. Lufthansa may decide to cancel some of these orders, which were made in expectation of a better economy.

The International Air Transport Association (IATA) recently predicted that airlines may not recover from the economic slump until as late as 2011.

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