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Business Briefs

Unhappy times continue for Lufthansa; Deutsche Bahn dips into the red; German Central Bank calls for austerity measures; Germania launches new budget airline and more.


Lufthansa losses higher than expected

Germany's largest airline, Lufthansa has reported a first-quarter loss of €356 million ($409 million) even after adjusting predicted losses in light of the ongoing SARS epidemic and the ailing German economy. Experts had feared a loss of €240 million, compared to €186 million last year. At €3.7 billion, the airline's turnover for the first quarter of 2003 fell within the expected bracket, but it is still down from the same period last year. With the effects of an unstable political climate in the Middle East, SARS and the economy, Lufthansa's immediate future is not looking too bright. The airline, which was forced to take 70 aircraft out of its fleet last month, has already predicted an overall operational loss for 2003.

Deutsche Bahn in the red

Following a slump in long-distance rail travel, Germany's national railway, Deutsche Bahn, has fallen deep in the red. Reuters reported on Wednesday that Deutsche Bahn, Europe's largest rail operator, ran up losses of €185 million ($212 million) in the first-quarter. The rail company had been expecting losses of up to €200 million ($229 million) spread out over 2003, but with the target almost reached in the first-quarter of the year, they have a high mountain to climb. Company managers say they will respond to the losses by introducing cuts. Hardest hit with losses of €130 million ($149 million) was long distance travel, which appears not to have recovered from the introduction of a new rail price system.

German Central Bank opposes tax hikes

The head of Germany's Central Bank, Ernst Welteke, has called for Germany to plug the hole in its federal budget through the introduction of strict austerity measures. In an interview with the daily Berlin paper Berliner Zeitung, Welteke said that although Germany had a budget deficit to correct, increasing taxes would likely prove counterproductive. He also warned against breaking the European Union pact ensuring the stability of its common currency, the euro, as such a move would discredit Germany within the EU. Welteke's comments came in response to a statement at the weekend by German Finance Minister Hans Eichel, in which he declared Germany's budget would exceed the legal limits stipulated by the stability pact.

Small sigh of relief for investors

The investment climate in Germany has improved slightly in the first quarter of the year. The 'investment climate indicator' run by the Munich-based ifo Institute and the Federal Association of German Leasing Companies for the business publication Wirtschaftswoche has reported an investment increase of 2.1 points to 14.9. Although companies remain skeptical about the current business climate, there seems to be a greater optimism about the coming six months, the figures suggested.

Clouds ahead for Germany breweries

Germany, a land of great brewing tradition, looks set to say goodbye to two-thirds of its abundant breweries. A study conducted by economic auditors Ernst & Young revealed that a continuing drop in beer consumption will lead some 340 of the country's current breweries to close their doors by 2015. The study, released in Düsseldorf on Wednesday, predicts that in 12 years time the German beer market will be swamped by foreign companies

New competition for cheap airlines

German airline Germania has revealed plans to launch Germania Express, a now-frills budget subsidiary. The new airline is scheduled to begin operating from Berlin's Tegel Airport on June 1, and will fly to 11 destinations across Germany and Europe. Later this year, the budget airline, which is hoping to appeal to business travelers, will also begin operating out of Munich and Hamburg. The move will bring Germania into direct competition with other upstart budget carriers in Germany including German Wings and Hapag Lloyd Express, which is operated by Germania's pilots using the company's own jets.

Compiled with material from wire services.