Lufthansa details positive impact of restructuring scheme

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Lufthansa Group's 'Score' efficiency programme generated €618 million ($800 million) in operational improvements for the company during its first year, twice as much as forecast.

The group says the programme has delivered an additional €300 million in structural earnings improvements than originally planned.

Under the programme the German company put some 800 measures in place in 2012. These included synergies in purchasing, co-ordinating flights between carriers, reducing staff costs and adjusting capacity.

"With Score, we are creating the financial basis for our extensive investment plans," says Lufthansa chief Christoph Franz.

"We want to expand our position as Europe's leading aviation group and considerably boost our profitability in every business segment."

Lufthansa is also starting to feel the effects of other actions taken prior to the efficiency drive, such as the closure of its short-lived Italian division Lufthansa Italia.

It has turned in group revenues of more than €30 billion for 2012, a rise of nearly 5%, although its operating profit was still down by 36% to €524 million - a fall it attributes to higher fuel costs, which were up by €1.1 billion.

Lufthansa's passenger airline division turned in a €258 million operating profit, down by 26%, but the largest member - Lufthansa itself - posted a loss of €45 million.

Owing to this sharp fall, Lufthansa Group will "continue to press ahead with Score in 2013", says chief financial officer Simone Menne.

Austrian Airlines generated a €65 million operating result, showing the benefits of transferring operations to Tyrolean Airways, while Swiss International Air Lines generated a €191 million profit.

Non-recurring benefits - such as the sale of UK carrier BMI and disposal of shares in reservations system Amadeus - helped to lift the group's net profit to €990 million last year.

Lufthansa Cargo's profits more than halved to €104 million but the group's other main divisions - maintenance, catering and information technology - all improved their operating results.

Franz says this year will be "particularly challenging" for the group. Restructuring and project costs will have a "negative impact" on earnings during 2013, says the company, while fuel prices will stay high. But it is forecasting a higher full-year operating profit.

Lufthansa is intending to achieve, through the Score programme, an operating profit of at least €2.3 billion. "Early successes are already visible and can be measured," says Franz. "Our goal remains the same."