Lufthansa Cargo is to follow its parent airline into a global alliance as part of the plan to return the now independent freight business to profit.

The partnership could be set up this year, and will be similar to the forthcoming passenger alliance of Air Canada, Lufthansa, SAS, Thai Airways and United Airlines, due to be launched on 14 May.

"What we really need is a global alliance similar to that on the passenger side. It may not be with the same partners, but of course we are talking to the traditional big partners of Lufthansa," says the cargo airline. The company adds that it needs the new alliance to serve customers which are themselves building global businesses.

Lufthansa Cargo already has long-standing co-operation agreements on cross-utilisation of capacity with Cathay Pacific, Japan Airlines, Korean Air Lines and Singapore Airlines. It also has closer alliances with SAS, South African Airways, Thai and United.

The alliance comes as part of the "Direction 2000" strategy designed to bring the company back to break-even in 1998 and put it on course for profits in 1999, stabilising at around DM40-60 million ($23-35 million) a year.

Lufthansa Cargo posted a modest pre-tax profit of DM20 million in its first year of independence in 1995, but was hit by 1996's falling yields and overcapacity, leaving a loss of DM60 million for the year.

There has already been an improvement in the first quarter of 1997, with losses cut to DM10 million - one-third of the losses a year ago - but the unit is still expected to lose about DM40 million over the whole year. The overall Lufthansa Group posted a 1996 pre-tax profit of DM686 million on sales which topped the DM20 billion mark. The result was below the record 1995 profits of DM756 million, because of the sharp rise in fuel costs and flight charges, but figures are expected to turn up this year.

Lufthansa chief financial officer and deputy chairman Klaus Schlede says that, with easing fuel prices, stable exchange rates and a general revival in the German economy, the group is expected to show a "markedly higher profit" in the current year.

The year has already got off to a good start, with the group reporting a first-quarter profit of DM20 million - the first in the company's history. The profit, which marks an improvement of almost DM70 million on the first quarter of 1995, came as sales jumped by 8.5%.

Source: Flight International