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Business Briefs

German low-budget airline Deutsche BA sold for a euro; government's hyped job floater plan is a flop; Germans get more tight-fisted on vacation and state health insurers face more financial bad news.

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No fuss holiday -- Germans are spending less money on vacations.

German no-frills airline sold for a song

British Airways announced Monday that it was selling its German subsidiary, Deutsche BA, to a Nuremberg-based investment group for the symbolic price of €1 ($1.17). The deal will see British Airways investing up to €35 million more in loss-making Deutsche BA and, in return, receive 25 percent of Deutsche BA’s profits until June 2006. The British carrier will also be entitled to 25 percent of the proceeds if the German airline is sold. Munich-based Deutsche BA, which was founded in 1992 and focuses on German domestic routes, has been suffering from heavy losses. In an attempt to attract more passengers, it turned itself into a low-budget airline more than a year ago. The new owner of Deutsche BA, textile baron Hans Rudolf Wöhrl, who is head of the Intro investment group, has emphasized that neither Deutsche BA’s scheduled flights nor its 800 employees would be affected by the carrier’s sale.

Government's job floater plan a disaster

German Economics Minister Wolfgang Clement’s much-touted job creation scheme to improve, in particular, the depressed labor market in eastern Germany, produced disappointing results on Tuesday. The so-called job floater, implemented by Chancellor Schröder’s government last November on the recommendation of an expert labor market reform committee, created just 4,804 jobs Germany-wide by the end of May. The government had hoped about 50,000 unemployed people would find jobs with the help of the program this year. The scheme enables companies, particularly in eastern Germany, to get low-interest loans if they hire an unemployed person. Statistics released on Tuesday showed that the special labor-creation program had worked most effectively in western Germany with 4,051jobs generated there, while just 753 jobs were created in the former communist east.

Vacationing for 1,000 euro

Germans are keeping a tight hold on their purse strings when it comes to going away on holiday. That was the message from a study released on Tuesday by the BAT Leisure Research Institute in Hamburg, which surveyed 2,893 vacationers on how much their last vacation had cost. The study found that the normal German holiday-marker spends €67 per day on average and shells out just €1000 for an annual two-week vacation. "The Germans compare prices even when it comes to their holiday plans," Horst W. Opaschowski, head of the institute said and added that Germans had discovered that their vacation was a place where they could save money. The most expensive holiday destination remained the U.S., with Germans spending an average of €104,8 per day there, followed by Australia, Egypt, Tunisia, Greece, Austria and Spain.

State health insurers in financial doldrums

Germany’s Ministry for Social Affairs announced Tuesday that the financial situation of the country’s deficit-plagued state health insurers worsened in the first three months of this year. The ministry said state health insurance companies faced a deficit of €630 million euro in the first quarter of 2003, with healthcare contributions 0,2 percent less compared to the same period last year. Experts fear the decreasing contributions could threaten government attempts to bring runaway healthcare costs under control. Last week the government unveiled a reform plan for the ailing healthcare system, introducing cost-cutting measures and reducing healthcare contributions from employers and employees to under 13 percent of a worker’s gross pay from the current 14.4 percent average.