Germany's largest carrier is in for the second straight annual drop in earnings due to worsening business conditions for airline operators. Lufthansa's loss-making Austrian subsidiary will also create a drag on profits.
Lufthansa was expecting its operating profit to fall from 820 million euros ($1.1 billion) in 2011 to a "mid three-figure million euro range" this year, the group's chief executive Christoph Franz told the company's annual news conference Thursday.
Franz said all divisions would be profitable with underlying "operating profits forecast across the board."
However, Germany's national carrier anticipated 2012 to be "plagued by uncertainty," Franz said, adding that the business environment remained "difficult," with fuel prices "determining how high group operating profits will be at year-end."
The muted 2012 outlook came after Lufthansa last week posted a 2011 net loss of 13 million euros, caused mainly by its troubled British Midland subsidiary. In addition, higher fuel costs and new air traffic taxes in Germany and Austria diminished the contribution of the group's passenger business.
Toughening up on subsidiaries
Franz announced that the airline was already implementing measures to boost underlying earning by "at least 1.5 billion euros over the next three years."
Among those measures was a boost in capital to the tune of 140 million euros for the group's subsidiary Austrian Airlines (AUA).
Describing the situation at AUA as "critical," Franz said the aid would be given "on condition that further drastic restructuring measures be implemented."
Lufthansa last year sold loss-making airline British Midland to International Airlines Group - the parent company of British Airways. The deal has yet to receive regulatory approval, which forced Lufthansa to underwrite the airline's 2011 losses.
In turn, the company's subsidiary Swiss Air saw revenues rise by 14 percent to 4 billion euros in 2011. Swiss Air operating profit fell slightly, however, from 298 million euros in 2010 to 259 million last year.
uhe/sms (dpa, AP, Reuters)