LUFTHANSA HOLDS TO EARNINGS PROJECTIONS DESPITE FIRST-HALF LOSS

LUFTHANSA HOLDS TO EARNINGS PROJECTIONS DESPITE FIRST-HALF LOSS    German airline Lufthansa AG reported a first-half, after-tax loss of euro 43 million ($39.4 million), but stands by its full-year earnings projections.
   Operating income fell 69.9 percent to euro 105 million ($96.3 million), despite a 13.7-percent improvement in revenue, to euro 7.81 billion ($7.13 billion).
   Higher fuel and staff costs, infrastructural bottlenecks, and losses due to a pilots' strike in May were blamed for the earnings decline.
   Still, the company “stands by its forecast of achieving an operating result for the year 2001 of euro 700 million to euro 750 million.”
   The target is based on a fourth-quarter economic recovery and stable yields. “For Lufthansa Cargo in particular, that is a crucial determinant of its result,” the company said.
   For the first half, Lufthansa Cargo saw a segment result of euro 2 million ($1.8 million), compared to euro 82 million for the year-earlier period. Operating expenses rose 5.4 percent to euro 1.24 billion ($1.13 billion), due largely to a 40.7 percent rise in fuel costs and an 8.1 percent raise in staff costs due to pay raises for ground staff and cockpit crews. Revenue improved 3.3 percent to euro 1.21 billion ($1.10 billion).
   Freight carried fell 5.3 percent to 832,000 tons while sales volume fell 2.8 percent to 3.6 billion revenue cargo ton-kilometers. Additional capacity, added primarily from the holds of passenger plans, rose 5.8 percent forcing the cargo load factor to 62.0 percent, from 67.5 percent in the year-earlier period.
   To improve the cargo unit's profitability, Lufthansa has removed the equivalent capacity of two Boeing 747 freighters from the market and has installed a plan to cut costs.
   Besides its passenger and cargo units, Lufthansa's businesses include catering; information technology services; ground services; maintenance, repair and overhaul and leisure travel.