Cost of restructuring will limit our profit for two years, says Lufthansa
LUFTHANSA, Europe's biggest airline by sales, said a tough economic outlook and restructuring costs would limit operating profit growth this year and next.
Lufthansa added that its board approved the purchase of 108 new aircraft. The aircraft with a total list price of €9bn include two mammoth A380 jets for its main Lufthansa brand and six Boeing 777-300s for carrier SWISS.
European carriers including Lufthansa, Air France-KLM and British Airways are slashing jobs and shelving growth plans as they grapple with soaring jet fuel prices, a weak economy and fierce competition from low-cost carriers and Middle East airlines.
Lufthansa is cutting 3,500 jobs, revamping low-cost carrier Germanwings and bundling procurement for its airlines.
It hopes its restructuring programme – dubbed SCORE – will help boost operating profit to €2.3bn in 2015, compared with €524m last year.
"We should not get our expectations too high for 2013," chief executive Christoph Franz said as he presented full 2012 financial results.
"Our 2013 result shall have to bear the burden of the restructuring and project costs."
Excluding restructuring costs of €160m, the revamp programme's hundreds of projects contributed €618m to earnings in 2012.
That figure will rise to €740m this year, Lufthansa said.
Lufthansa reported last month its 2012 operating profit dropped 36pc as the price of jet fuel rose and it spent money on its restructuring programme.
Analysts, on average, see Lufthansa's operating profit rising to €1.1bn this year and to about €1.3bn next year.
Fuel accounts for more than one-fifth of Lufthansa's operating costs, and its fuel bill rose almost 18pc to €7.4bn in 2012 from €6.3bn a year earlier.
Lufthansa was the only major European legacy airline to post a net profit for 2012, helped by a €623m gain from the sale of shares in Amadeus IT Holding.