Lufthansa CEO promises continuity as quits for Roche

16th September 2013, Comments 0 comments

Lufthansa chief executive Christoph Franz promised the German flag carrier will remain on course after the surprise announcement he will step down next year to go to pharmaceuticals giant Roche.

"Don't expect any major changes, or a different strategy. There is no alternative to the path we've chosen," Franz told a telephone news conference after the unexpected news of his departure hit Lufthansa's share price.

Following reports in both German and Swiss media at the weekend, Lufthansa confirmed early Monday that 53-year-old Franz would "not (be) available for an extension of his contract as chairman of the executive board and CEO" after it expires in May 2014.

The news initially weighed on Lufthansa's shares on the Frankfurt stock exchange where they fell by 0.7 percent to an intraday low of 13.84 euros while the overall market was up more than 1.0 percent.

But the share subsequently came back to show a gain of 0.39 percent by mid-afternoon.

For its part, Roche said in own statement that Franz had been nominated to succeed its chief Franz Humer, who plans to retire early next year.

Roche said Franz would be proposed formally to its shareholders at the group's annual meeting on March 4.

Franz said he was "delighted" to be joining the Basel-based giant.

"Roche is an outstanding company. As a board member I have had ample opportunity to get to know and admire its strong business performance and corporate culture. Strategically, Roche is in very good shape, and I am looking forward to taking on this opportunity."

Humer, a 67-year-old Austrian and Swiss dual citizen, has been with Roche since 1995.

He became chief operating officer in 1998 and chairman in 2001.

Humer lauded Franz, saying that Roche was "getting a chairman with outstanding personal qualities and an impressive record as head of a major global company".

Swiss-based analysts Helvea echoed that, saying Franz's track record was crucial and that "the proposed election looks to be positive for Roche's future".

Franz has carved out his career in the transport sector, having moved between Lufthansa and German rail company Deutsche Bahn.

But the German also knows the pharmaceutical sector from serving on Roche's supervisory board since 2011.

He has strong ties with Switzerland, having led the Lufthansa-owned company Swiss International Air Lines from 2004 to 2009, turning around the airline which was crafted from defunct carrier Swissair.

Franz said the decision to leave -- after 15 years in the Lufthansa group -- was "anything but easy".

"I like working for this company. But for career reasons, I have decided to end my work for the Lufthansa group once my contract expires in May 2014," he said.

By that time, the airline's restructuring programme and key investment decisions "will have laid the foundation for Lufthansa's future success. That is a suitable time for a change in management," he added.

Lufthansa's supervisory board chief Wolfgang Mayrhuber said he "regretted" Franz's decision to quit.

DZ Bank analyst Dirk Schlamp said Franz's departure comes at a "bad moment" for Lufthansa which has been hit by competition from low-cost rivals and high fuel costs.

Franz's restructuring programme aims to improve operating profit by at least 1.5 billion euros from the end of 2014, with 3,500 jobs facing the chop.

Equinet analyst Jochen Rothenbacher suggested that Carsten Spohr, head of the Lufthansa's passenger business, would be "the most likely successor."

But another potential candidate could be Harry Hohmeister, head of the Lufthansa subsidiary, SWISS.

The succession issue would be discussed at a board meeting on Wednesday, even if a decision was not expected for some weeks yet.

According to US media reports, the executive board was also set to approve an order for 50 long-haul aircraft -- comprising Airbus 350-900 and Boeing 777-9X jets -- worth some $14 billion.

Contacted by AFP, a Lufthansa spokesman said no decision had yet been taken, but that the airline was in "intensive talks" with the aircraft manufacturers, without providing any further details.

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© 2013 AFP

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