In light of the difficult operating environment, Deutsche Lufthansa is stepping up cost cutting and restructuring at both Austrian Airlines and British Midland Airways (BMI). The move is an attempt to ensure the group achieves its full-year earnings target of a positive operating result.
Austrian Airlines posted an operating loss of €64 million in the first half of the year, compared to a €70 million loss a year earlier. Bmi, meanwhile, widened its operating loss to €120 million in the first half compared with a EUR93 million loss in the period last year. The unrest in Middle East and Africa severely impacted bmi sales in the second quarter, which prompted the following statement from Lufthansa: “In the light of the ongoing difficulties in British Midland’s key markets, an improvement on last year’s operating result looks unlikely at present.”
Austrian Airlines’ flight plans have been adjusted and a hiring freeze has been imposed to help cut staff costs.
Lufthansa Technik has also been impacted by the crises in the Middle East, Africa and Japan, which have caused a slump in revenue to slump and have delayed contract negotiations. The maintenance arm is now not expected to show an increase in operating profit in 2011.