Lufthansa Eyes Acquisitions During Crisis
January 29, 2009
Lufthansa still plans to invest in acquisitions to be ahead of the game when the global economic crisis ends, supervisory board Chairman Juergen Weber said.
"We will concentrate on Europe for now," he told Frankfurter Allgemeine Zeitung in an interview published on Thursday.
Lufthansa is currently taking a breather after an acquisition spree last year, in which it set out plans to buy Brussels Airlines and Austrian Airlines, cutting the number of large independent airlines in Europe.
Scandinavian airline SAS is a potential target, while Spain's Iberia could become available in the longer term if its merger talks with British Airways come to nothing.
"If the conditions are right, SAS will become interesting for us," Weber told Frankfurter Allgemeine.
Lufthansa in 2008 carried around 57 million passengers, making it Europe's biggest airline in passenger volume terms.
In the fiscal year to March 2008, Air France carried 51.7 million passengers, and BA, Europe's third-largest carrier, had 33.1 million passengers.
Demand for flights has eased as companies cut back their spending on business travel. Weber said the crisis was starting to affect non-business travelers, many of whom will cancel vacation plans this year.
Around the world, airline passenger numbers are expected to slip 3 percent in 2009, more even than the 2.7 percent decline posted in 2001 after the September 11 hijacked plane attacks frightened travelers away, according to the International Air Transport Association.
"I don't even think a decline of 5 percent can be ruled out. But that would be a horror scenario," Weber said.
He said Lufthansa would absorb capacity on routes that other airlines were abandoning. Many airlines have dropped routes from their schedule or reduced the frequency of some flights to ensure they fill their planes.
"Based on our strong impression that Lufthansa is able to react actively and very flexibly to weaker demand patterns during the worldwide recession, we expect lower margin erosion overall compared to its peer group," DZ Bank analyst Robert Czerwensky said in a note on Thursday.
Rival British Airways issued a profit warning on Monday, saying the British pound's weakness against the euro and other non-fuel costs would hurt its profitability this quarter.
Lufthansa in October cut its 2008 operating profit goal to EUR1.1 billion euros (USD$1.44 billion), from a previous target of about EUR1.38 billion. The company is due to report full-year results on March 11.
