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Lufthansa forecasts profits to withstand tough 2011

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Lufthansa forecasts profits to withstand tough 2011
Photo: DPA
14:48 CET+01:00
Leading German airline Lufthansa on Thursday forecast improved operating profit and sales for this year and next, though 2011 is expected to be tough on the airline industry. The airline also announced the expansion and modernisation of its fleet.

For 2010, the Lufthansa group reported an operating profit of €876 million on sales that reached €27.3 billion.

"The company expects a further increase in revenue and the operating result, and as things currently stand, the conditions for a dividend payout should also be fulfilled for this year," Lufthansa said in a statement.

For 2010, the airline plans to pay a dividend of €0.60 per share.

But 2011 "will not be a walk in the park," according to chairman Christoph Franz.

Lufthansa stressed that 2011 will bring a new set of challenges, with competition getting tougher on routes within Europe and on those to Asia and the Americas.

On top of that, a German air traffic tax will hit German and other European airlines, and high fuel prices are expected to cut airline industry profits nearly in half, despite growth in air travel with the global economic recovery, according to the International Air Transport Association (IATA).

Further complicating Lufthansa's efforts in 2011 are the consequences of political unrest, terrorist attacks and natural disasters.

Group finance director Stephan Gemkow said at a press conference that Lufthansa spent almost €5.2 billion on fuel last year, an annualised jump of 42 percent – owing to higher prices, greater volumes and a rise in the value of the dollar.

He forecast an additional jump of 30 percent this year to €6.8 billion, which would top the group's 2008 record of €5.4 billion.

Still, figures released last week showed that the airline bounced back to a net profit of €1.1 billion in 2010, after losses of €34 million in 2009.

Lufthansa has benefited from a rebound in passenger and freight traffic, while a major restructuring programme has also begun to bear fruit.

Most recently the German carrier acquired Austrian Airlines and British airline BMI, and is turning around their operations as well.

Lufthansa has restructured regional activities and begun using four Airbus A380 superjumbo jets on intercontinental routes.

The airline will receive four more A380s this year, including two this month, and announced late Wednesday an order of 30 Airbus A320 planes and five Boeing 777 cargo jets for a total list price of €4 billion. The most recent Airbus orders are slated to join Lufthansa's active fleet in 2016, while the Boeing jets will begin service in 2013.

The new planes are part of an ongoing "modernisation and expansion" scheme, Lufthansa said in a statement released Wednesday.

"Investment in new aircraft strengthens the competitiveness of airlines in the Group. Besides greater fuel efficiency, all the models on order will help lower operating costs as well as noise levels and emissions," the statement said.

"The aircraft come with improved aerodynamics and new engines. They burn around 15 percent less fuel than today's comparable models," Lufthansa said, adding that noise emissions will be 10 to 15 decibels below current levels.

The Airbus planes are for passenger use, while the Boeing 777 is "the most modern freighter of its size," which will be utilised "to seize growth opportunities fuelled by rising demand," the airline said.

afp/The Local/adn

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