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Lufthansa restructuring drive

July 9, 2014

Germany's largest airline, Lufthansa, has said it will try to bolster profitability by investing more and extending its low-budget services. The announcement came a month after a 2014/2015 profit warning.

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Lufthansa aircraft
Image: Reuters

In office for just two months, Lufthansa's new chief executive, Carsten Spohr, made it clear on Wednesday that his company was willing to take up the gauntlet from low-budget operators such as Ryanair and Emirates.

As part of a new strategy to raise profitability, Lufthansa would not only focus on its no-frills subsidiary Germanwings, but would also call into being another low-budget airline for European routes under the Eurowings brand, Spohr said.

He said the new subsidiary could start operating as early as next spring and would have up to 23 medium-range Airbus A320 jets.

Leaner and cheaper

But Spohr also mentioned plans to provide cheaper long-haul flights, most likely in cooperation with a foreign business partner.

"Turkish Airlines is a potential partner for us, and our talks on the project have already reached an advanced state," the CEO said in a statement.

Spohr added that a final decision was due in the fall of this year. Spohr has been under pressure to speed up the in-house restructuring process ever since he took office.

A month ago he was forced to issue a profit warning for 2014 and 2015 as mounting international competition had made it harder for the German flag carrier to secure bottom-line profit.

hg/cjc (Reuters, dpa)