FRANKFURT: Deutsche Lufthansa AG said it will cut 3,500 administrative posts as it seeks to improve profitability with a 1.5 billion-euro (US$2 billion) savings program.
The worldwide job cuts will help deliver one-third of the savings Europe’s second-biggest airline aims to deliver by the end of 2014, it said today in a statement. A global purchasing project will save 200 million euros this year, and traffic optimization will cut costs by 10 million euros, it said.
Lufthansa, which has 117,000 employees, yesterday reported a first-quarter operating loss of 381 million euros, compared with a 169 million-euro deficit a year earlier. Analysts had predicted a 297 million-euro loss, according to six estimates.
“Higher taxes, fees and charges put a massive strain on our quarterly result,” Chief Executive Officer Christoph Franz said today. The savings program “is our own response to these additional burdens. It will safeguard Lufthansa’s position.”
Shares of Cologne, Germany-based Lufthansa fell as much as 3.1% to 9.60 euros and were trading 1.7% lower as of 9:03 a.m. in Frankfurt.
The company’s Swiss and Austrian Airlines units had losses of 6 million euros and 67 million euros respectively in quarter, according to today’s statement. The cargo unit generated 19 million euros and Lufthansa Technik some 62 million euros. (Bloomberg/T07)
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