Lufthansa Gives Bleak Outlook For Non-Airline Units

Lufthansa expects its cargo and maintenance businesses to continue feeling the impact of the global economic crisis until at least 2010, reports in company employee newspapers show.

The company has taken two MD-11 cargo planes out of service as part of a plan to cut capacity by 20 percent, the Lufthanseat newspaper reported this week. The company had already said it would shorten working hours for cargo employees.

A spokesman for the company said the two planes would remain grounded until October 2010. Another two cargo planes are currently not being used but have not been taken out of service.

Engine maintenance business Lufthansa Technik expects to see its industry environment remain difficult until the end of 2010, the division's sales head Walter Heerdt told employee newspaper Lufthansa Technik News.

In the first nine months of 2008, the cargo division generated about 16 percent of Lufthansa's group operating profit, and Lufthansa Technik contributed 23 percent. Lufthansa is scheduled to publish full-year 2008 results on Wednesday.

Airlines around the world have cut capacity and grounded aircraft in response to a drop in demand for air travel. Businesses are reducing their travel budgets and consumers are also keeping a tighter hold of their purse strings.

"Older aircraft or those needing an overhaul are taken out of service first," Heerdt said.

He said that from 2011, there would be slight market growth, though the impact of the crisis would still be felt for several years.

Lufthansa Technik is the world's third-largest company offering engine maintenance, repairs and overhauls, with a market share of around 8 percent, according to 2007 figures published by rival MTU Aero Engines.

To generate new business, the company planned to expand in the Middle East and Africa.