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Fighting to survive

June 25, 2009

Faced with a sharp drop in passenger numbers, Germany's flagship airline Lufthansa is to streamline its passenger route network and mothball more planes to save money.

A lufthansa plane
Lufthansa faces a tough time as it battles huge lossesImage: AP

Speaking at a meeting on business strategy with investors in Seeheim on Thursday, Lufthansa executives said the cost-cutting measures were aimed at saving 300 million euros ($420 million) in the current financial year.

Chief financial officer Stephan Gemkow said that the company would introduce shorter working hours for some staff, who will qualify for a government-funded program to top up wages.

A ban on recruitment has been in place since May 2008. Lufthansa also introduced job cuts in its air-cargo division in March but to date has not stood down passenger-division staff at any of its main hubs.

Separately on Wednesday, the carrier said it is increasing its fuel surcharge on domestic and European flights, blaming a steep rise in oil prices this year.

"Airlines fighting for survival"

The global aviation industry has been pummeled by the global recession and falling passenger numbers. Lufthansa said on Thursday it didn't expect a recovery in the sector before 2010.

According to the International Air Transport Association, IATA, passenger numbers dropped by 9.3 percent worldwide in the month of May.

"Airlines are fighting for survival, cost cuts and a careful use of financial resources have the higest priority," Giovanni Bisignani, head of IATA said on Thursday.

Editor: Sonia Phalnikar