2nd UPDATE: Lufthansa To Cut Capacity By 0.2% In 2009 - CFO
11 Marzo 2009 - 12:06PM
Dow Jones News
German airline Deutsche Lufthansa AG (LHA.XE) Wednesday said it
plans to cut capacity by 0.2% across the group in 2009 due to
dwindling demand for air travel in the global recession.
At its core airline, Lufthansa Passenger Airlines, capacity will
be reduced by around 0.5% in 2009, Chief Financial Officer Stephan
Gemkow said at the company's annual earnings press conference
according to the text of a speech.
The expected decline would be even larger excluding higher
flight frequencies and new routes at newly launched Lufthansa
Italia. Without the effect from its Italian unit, capacity would
fall around 1.4% this year. Including the unit Swiss International,
the group's capacity will be reduced by 0.2%, said Gemkow.
Gemkow added that Lufthansa also plans to "intensify and extend"
cost cutting measures in 2009 aimed at safeguarding the company's
future results.
In 2008, the company launched a EUR250 million cost-cutting
program.
Gemkow also lowered Lufthansa's fuel cost estimate for 2009,
saying the company will probably require jet fuel worth EUR3.2
billion in 2009.
In January, the company had said this year's fuel bill would be
around EUR3.7 billion, considerably lower than the EUR5.4 billion
in 2008.
Gemkow said 65% of 2009 fuel requirement has been hedged, based
on an oil forward rate of $50.44 a barrel and a euro-dollar
exchange rate of $1.26.
He also said Lufthansa intends to spend around EUR3 billion in
capital expenditure, half of which will be spent on aircraft and
spare parts.
The delivery of Lufthansa's first two superjumbo A380 will
further be delayed, Gemkow said, adding that they're now expected
to be delivered in early 2010. Lufthansa previously expected to
receive the aircraft at the end of this year.
However, "this has no effect on our operating plans, since the
two aircraft were only intended to go into service with the start
of the summer flight schedule 2010," he said. Apart from the
planned acquisitions of Austrian Airlines AG (AUA.VI), U.K.'s
British Midland Airways, or bmi, and the purchase of a stake in SN
Holding SA, the parent company of SN Brussels Airlines, Lufthansa
doesn't currently have plans to maker further acquisitions, Gemkow
said.
Chief Executive Wolfgang Mayrhuber said the company doesn't want
to overreach itself in terms of acquisitions, even though there are
more than enough opportunities for M&A in the market.
Company Web site: www.lufthansa-financials.com
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
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