LUFTHANSA CUTS EUROPEAN CAPACITY, EXPENSES
German airline Lufthansa said Thursday it will implement a series of new cost-cutting measures in line with weakened passenger and freight volumes.
Under the plan, Europe's biggest airline has instituted an immediate hiring freeze, pulled 10 more aircraft out of service in the German and European market and cut investments by 200 million euros (about $200 million). In January, Lufthansa reduced capacity by nine aircraft and adjusted routes to counter weak demand. The move brings to 46 the number of aircraft Lufthansa, its short-haul subsidiary, Cityline, and its regional partners have grounded in recent months.
Lufthansa cited lower passenger and freight revenue in January compared to the same month a year ago, higher fuel costs and the prospect of further passenger declines in the event of a Middle East war for its move.
Last month Lufthansa reported that its cargo business received its hardest hit in the fourth quarter ended Dec. 31. For 2002 Lufthansa transported 1.62 million tons of freight and mail, down 1.9 percent from 1.65 tons in 2001. Due to better capacity utilization the German carrier was able to improve its cargo load factor 3.8 percent to 66.6 percent.
By reducing expenses during the past 18 months Lufthansa has generated more than $890 million in additional cash flow and remains very profitable, unlike most large airlines these days. In November it projected a profit of about 600 million euros to 650 million euros for in 2002 despite the crisis in the aviation industry.
