Lufthansa cuts forecast

June 13, 2001 Posted: 0856 GMT

LONDON (CNN) -- Lufthansa said on Wednesday it was cutting its earnings forecast for 2001 to cover the cost of a strike by pilots and pay rises they won.

Europe's biggest airline and German flag carrier said it expects to post an operating profit of between 700 million and 750 million ($595 million and $637 million). That compares with an earlier forecast of 1 billion.

The company said the pay settlement would add 125 million to it expenses on top of the 75 million from the three strikes in May, that crippled its schedules and stranded tens of thousands of passengers.

The pilots were seeking an average wage increase of as much as 35 percent on the company's top pilot's wage of 350,000 deutsche marks ($158,000). The starting salary for a pilot is 100,000 marks and the captain of the airline's flagship Boeing 747 can expect to earn over 350,000 marks.

The pilots wanted compensation for low pay increases during the early 1990s when the airline's finances were stretched

The pilots agreed to a hefty pay increase, up as much as 30 percent, last Friday after seven rounds of talks between Lufthansa's 2,400 pilots and the airline came to naught the two sides went into mediation led by former German foreign minister Hans-Dietrich Genscher.

Lufthansa also said it expects a "downturn in the world economy and air traffic restrictions" to depress earnings by 50 million to 100 million.

The company said last month it made a first-quarter loss of 94 million compared with a net profit of 5 million in the same period a year ago.

It blamed soaring fuel prices, which rose 43.1 percent, or 121 million, to 402 million, and Internet investments for the loss.

Shares in Lufthansa (FLHA) fell 3.8 percent to 20.45 in Frankfurt morning trade.

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