Lufthansa sees operating profit

Lufthansa offers battered sector hope

COLOGNE, Germany -- Lufthansa Chief Executive Juergen Weber expects Europe's second-largest airline to make an operating profit of 400 million euros ($382 million) in 2002.

Weber's remarks at the German company's annual general meeting sent the stock up almost 3 percent to 14.46 euros, before settling at 14.08 in midday Frankfurt trading. Investors were also cheered by the carrier's decision to pay a dividend for 2002.

Analysts polled by Reuters had been expecting the airline to forecast an operating profit of between 330 million and 500 million euros. The company posted an operating profit of 28 million euros in 2001, down from more than 1 billion euros in the previous year.

"This forecast takes predictable risks into account and is therefore resilient,'' said Weber. "It depends, of course, on continued recovery of demand for air transport services and that there are no renewed geopolitical events that might counteract the current upturn.''

Before today's forecast, the carrier had said it expected a marked improvement in operating profit this year.

The airline was forced to drop plans to issue a dividend in 2001 after a pilots strike, economic slump and September's terror attacks dented earnings. Weber said bookings figures also pointed to a further recovery.

Lufthansa (FLHA), along with is rivals British Airways (BAY) and KLM of the Netherlands, have grounded planes and cut costs -- mainly through job losses -- in order to keep planes in the air. The airline posted 12 million euro first-quarter operating profit last month but traffic is still down on last year.

Weber reiterated the airline would put 18 of 43 grounded airplanes back into service during the summer, five of them on intercontinental routes.