Lufthansa claims Swiss takeover will reduce costs
23 March 2005, FRANKFURT - German airline Lufthansa said on Wednesday that the takeover of Swiss will eventually reduce costs, but it will also cause a stagnation of operating profits in 2005 after last year's strong growth.
23 March 2005
FRANKFURT - German airline Lufthansa said on Wednesday that the takeover of Swiss will eventually reduce costs, but it will also cause a stagnation of operating profits in 2005 after last year's strong growth.
Lufthansa boosted operating profit to EUR 383 million (US$ 499.7 million ) in 2004, compared with only EUR 36 million in 2003. The airline carried more than 50 million passengers for the first time in its history in 2004.
Net profit in 2004 came to EUR 404 million, after record losses of nearly EUR 1 billion the year before during a restructuring of the airline.
Lufthansa said that one-off costs for integrating Swiss operations will run to EUR 101 million. But starting with 2008, the yearly savings will be EUR 165 million, said Chief Financial Officer Karl- Ludwig Kley said.
Lufthansa is paying CHF 8.955 Swiss francs (EUR 5.76) per share for the 15 percent of Swiss held by small-time shareholders. The total price for that stake is CHF 71.6 million (EUR 46.1 million), Kley said.
His remarks come a day after the boards of Lufthansa and Swiss International Airline gave their final approval for the takeover of the struggling national carrier.
The landmark deal, which will involve Swiss's integration into the Lufthansa group, stipulates that the German carrier will keep the name 'Swiss' on planes and preserve it as a separate unit.
The decision came after both sides received a go-ahead Tuesday from the Swiss government, which holds 20 percent of corporate shares.
Other key Swiss shareholders are the Swiss banks UBS and Credit Suisse, the canton of Zurich, local authorities and Swiss blue-chip companies such as Nestle, Novartis and Roche. Most were said to be eager to off-load shares of the ailing airline.
Subject: German news