German publishing company Springer returns to profitability, Lufthansa takes on bargain airlines, politician describes executive pay as "organized crime" and more.
Building its way back to profit: Axel Springer Verlag
Back in Black
Axel Springer Verlag, publisher of the tabloid Bild and Die Welt newspapers on Monday reported it had returned to profitability despite a decline in revenues. The company said it was on track to pull in €63 million in profits on overall revenues of €2.8 billion ($3 billion). However, overall revenues are said to be down three percent. In 2001, the company reported a €198 million loss. The company said it expects to pay shareholders a dividend this year of 65 cents per share.
Domestic Traffic Up for Lufthansa
Germany's flag ship carrier, Lufthansa, said on Monday it has increased sales on its domestic flights by close to 30 percent following the introduction of a special €88 ($94) euro fare designed to make the airline more competitive with discount carriers. After months of battling low-cost carriers like Germania in court, Lufthansa has recently moved into the low end of the market -- by investing heavily in the low-cost German Wings startup as well as offering its own cut-rate fares. Domestic success comes at a time when the airline is struggling to fill planes on many European routes.
Deutsche Bank to Insure Itself Against Bad Loans
Deutsche Bank, the biggest bank in Germany, expects to set aside €880 million ($942 million) in provisions to cover bad or risky loans this year, down from €2.1 billion in 2002, the bank's chief financial officer, Clemens Boersig, said on Monday. Speaking at an analysts conference here, Boersig said Deutsche Bank planned to begin hedging against possible loans losses in the future. A report in the newspaper Die Welt on Monday said Deutsche Bank planned to become the first bank in Germany systematically to cover itself against bad loans. Quoting banking sources, the newspaper said that Deutsche Bank planned to use financial market derivatives to hedge possible losses on the loans it awards to German and international companies if those loans are for more than 180 days. (AFP)
Former Party Leader Says German Exec Pay Is Criminal
The former head of Germany's governing Social Democratic Party on Sunday described as "organized crime" the salaries received by the country's top executives. "The salaries and severance packages on the executive floors, as the Mannesmann scandal shows, are organized crime," Oskar Lafontaine told the mass-circulation Bild newspaper. "That these people are now being given an even greater reward with lower taxes is a scandal." Lafontaine, who resigned from the party in 1999, is calling for changes in German law to permit the easy firing of corporate executives and board members at anytime, without golden parachutes. The current debate was sparked by the sale of mobile phone giant Mannesmann to Vodaphone in 2000. British parent Vodaphone paid out more than €125 million in severance and bonuses to Mannesmann's top executives. Many are now undergoing federal investigation.
Escada Takes a Fashion Dip
The economic downturn is taking it's toll on the German apparel industry. Fashion house Escada said on Monday its sales for 2001-2002 dropped to €773 million ($830 million), a nine percent drop over the previous year. The house, known for its expensive pret-a-porter duds, was caught off-guard with huge inventories shortly after the Sept. 11 terrorist attacks and found itself slipping into red ink rather than its namesake cocktail dresses. To minimize further risks, Escada instituted a number of cost-savings measures and delivered fewer products to retailers -- a move that is now hurting sales. But the company says it is optimistic it can boost sales in its core business by 10 percent for the current business year.