Lufthansa to initiate EUR1 billion cost cutting drive, submits revised Austrian offer to EC

Lufthansa dominated the headlines yesterday, with reported plans to launch a EUR1 billion cost cutting programme, called ‘Climb 2011’, which will reduce the carrier’s administrative workforce by 20% in the medium term. Definite measures under the programme will be announced “in the coming weeks”, but up to 400 positions are expected to be lost, mostly in Germany, mainly through natural attrition.

Lufthansa Passenger Airlines CEO, Christoph Franz, told The Financial Times, “many of our competitors are today producing at distinctly more favourable cost levels and can woo important customer groups away from us with more attractive fares”.

The airline’s shares rose 1.8% yesterday, while Austrian Airlines rose 2.4% on reports Lufthansa submitted revised proposals to the European Commission (EC). The EC stated it will “study the offer carefully”, but neither the EC or Lufthansa commented on details.

SkyEurope’s shares soared 60% after a series of capital restructure moves.

Europe selected airlines daily share price movements (% change): 16-Jul-09