Lufthansa to sell IT infrastructure to IBM | Business| Economy and finance news from a German perspective | DW | 22.10.2014
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Lufthansa to sell IT infrastructure to IBM

German flag carrier Lufthansa has decided to outsource its IT infrastructure unit to IBM to save costs. It said that while who the buyer was was now clear, specific contract conditions still had to be agreed.

Lufthansa reported Wednesday it was close to sealing a deal with IBM on the sale of its IT infrastructure business, a unit within the German airline's Systems division.

The company said the final conditions of the contract, including a long-term service agreement with the US firm, were still being negotiated.

Lufthansa said the sale would wash around 70 million euros ($89 million) into the airline's coffers annually in terms of savings, but added that one-off costs caused by the restructuring would amount to 240 million euros before tax in the 2014 fiscal year.

Profits too low

The carrier said the transaction would be finalized by the end of the first quarter in 2015 to coincide with the liquidation of the unit.

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Lufthansa's restructuring Needs (23.09.2014)

The infrastructure business, which provides data centers, networks and telephony, requires a high level of investment that Lufthansa is no longer willing to make amid a large-scale cost-saving drive aimed at enhancing the airline's competitiveness.

While the IT unit accounted for 40 percent of Lufthansa Systems' total turnover of 640 million euros, it made up only 25 percent of the division's profit, the company told Reuters.

The carrier's plan to get rid of the business had originally drawn interest from a number of heavyweights, including Hewlett-Packard, Atos and Deutsche Telekom's T-Systems.

hg/ng (Reuters, dpa)

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