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Lufthansa: Good times can't go on
FRANKFURT, Germany -- Deutsche Lufthansa, Europe's third-largest airline, on Wednesday posted a bigger-than-expected operating profit for the first nine months of this year as it cut costs to restore profitability. But the airline warned on Wednesday that a downturn in passenger business would lead to a fourth-quarter loss. Operating profit for the January-to-September period rose to 790 million euros from 290 million a year earlier. Last year's numbers were hit by a slump in passenger travel following terror attacks on the United States. Analysts polled by Reuters had forecast an average operating profit of 611 million euros. According to Reuters calculations, third-quarter operating profit came in at 458 million euros after a first half profit of 332 million euros. Nine-month net income rose to 344 million euros from 279 million euros. The airline beat its own full-year target in nine months, establishing it as Europe's most profitable airline, even as the climate for the airline industry remains cloudy. But Lufthansa, which was forced to ground 43 aircraft after the September 11 terror attacks, has been bullish about its performance as many carriers in Europe see a patchy recovery in passenger traffic and finances. In August, the airline said it expected to make an operating profit of least 500 million euros in 2002, up from the previous estimate of 400 million euros. But analysts had said that target would be easy to beat. The company lifted its 2002 operating target to between 700 and 750 million euros, which implied a fourth-quarter loss of as much as 90 million euros and Lufthansa warned conditions were tough as it heads into a new round of wage negotiations with staff, Reuters reported. "This result exceeds all expectations. But let me add: it cannot go on like this,'' Chief Financial Officer Karl-Ludwig Kley said. "The passenger business segment will not manage to maintain its current result up to the end of the year.'' Rival British Airways posted as strong set of numbers on Tuesday after it cut thousands of jobs and reduced the number of seats it flies. But BA's stock fell on concerns about its ability to drum up business. Lufthansa has also cut its capacity by 10 percent, with the reduction allowing it to be over taken by Air France as Europe's No. 2 airline. But Lufthansa has said it would hire more pilots and flight attendants even as its U.S. peers fight of bankruptcy. Chief Executive Juergen Weber told Reuters he did not rule out helping ailing U.S. partner United Airlines with a "payment'' but gave no further details. Lufthansa's stock, which has fallen almost 40 percent since hitting a high of 19.79 euros in March this year, fell 1.4 percent to 12.56 euros in midday Frankfurt trading on Wednesday. "The Lufthansa figures were quite good but the problem is like all other major airlines that a conflict in the Middle East would hit them severely, and that is the problem,'' Juergen Gries, trader at Merck Finck & Co in Munich, told Reuters.
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