Lufthansa Technik is to start work this month on a €10 million ($16 million) research and development centre in Hamburg dedicated to cabin innovation.

The centre, which could open as early as December, will feature state-of-the-art testing laboratories and exhibition areas and represents the German maintenance, repair and overhaul business's desire to extend its competence in cabin innovation.

This is an area which the company admits started modestly enough, although it has in recent years developed into a core business division.

Speaking at the company's annual results presentation, chairman August Henningsen said: "The concepts for the future standards for VIP and airline customers will be born in this building, allowing us to expand our position as the leading one-stop shop for products related to the cabin."

LHT's core team for cabin innovation currently numbers around 60 and that figure should climb to 100 in the new building, matched by the same number of employees from supplier operations.

This new innovation centre will lead to a considerable improvement in the networking of Hamburg's pooled expertise relating to airplane cabins," Henningsen stressed.

Advanced testing facilities to monitor product airworthiness will be built in a qualification laboratory, with an environmental testing chamber as well as electromagnetic compatibility, vibration and crash testing facilities. LHT's existing office of airworthiness will also be located in the new building.

LHT says 2007 was an excellent year thanks to a boom in air travel, despite IATA forecasts that suggest the next cyclical downturn is around the corner.

Outside its parent airline business - its most important customer which also enjoyed record passenger numbers, flights and load factors, LHT outdid the market in terms of growth (6.7%) with 61.2% of total revenues generated externally.

Total turnover grew 4.6% to euro 3.6 billion, with greater productivity and efficiency gains producing a 18.6% increase in pre-tax earnings which rose to euro 287 million.