Lufthansa needs to be cautious about its spending, what with the threat of low-cost carriers in Europe and the threat of Turkish Airways and Gulf carriers encroaching on its turf.
Deutsche Lufthansa AG, the German airline, said it plans to suspend its dividend payout to retain its reserves, as the company embarks on a fresh round of cost cuts and enlarges its short- and long-haul fleet of aircraft.
The company said it will buy 8 long-range and 100 short- to medium-range aircraft, in a purchase valued at about 9 billion euros, according to a statement today. At the same time, Lufthansa said it will close sites and merge administrative functions in a bid to save costs.
Lufthansa said profit last year reached 990 million euros, compared with a year-earlier loss of 13 million euros, mainly as it benefited from disposal gains. Revenue in 2012 rose to 30.1 billion euros from 28.7 billion euros, Deutsche Lufthansa said, citing preliminary earnings figures.
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Photo credit: A man wheels a luggage bag with a Lufthansa logo in Vienna April 30, 2012. Lisi Niesner / Reuters