Lufthansa sees efficiency measures boosting earnings this year

German airline Lufthansa vowed to deliver on profitboosting initiatives this year, saying painful cost cuts would pay off and forecasting a rise in revenue.

Shares in Europe’s biggest airline by sales rose 2.6 per cent to €15.58 by 0947 GMT, after rising as high as €16.06, their highest since late March.

The airline said it expects higher operating profit and revenue in 2013, driven by a restructuring programme dubbed SCORE that had helped offset soft demand in January to March as Europe’s debt problems weighed on consumer sentiment.

“2013 is the year in which we want to show that we are capable of implementing our ambitious plans,” Europe’s biggest airline by sales said on Thursday. Like Air France-KLM and International Consolidated Airlines Group, which groups British Airways and Iberia, Lufthansa is in the midst of deep cutbacks to cope with soaring fuel costs and competition from Gulf and low-cost carriers.

Chief financial officer Simone Menne told reporters details on revamping the passenger division would be announced in May, raising the prospect of a wider restructuring. The passenger business managed to eke out a 0.6 per cent growth in quarterly revenue to €5.07 billion, mainly through tightened seating capacity growth.

The airline’s first-quarter operating loss remained at €359 million ($474 million), a bigger loss than the €299 million expected and hit by €64 million in restructuring costs, strikes and a long winter.

Revenue grew only 0.1 percent to €6.63 billion versus a forecast €6.65 billion.

Analysts said while the quarterly results were somewhat disappointing, SCORE should bear fruit later this year.

“In addition, we continue to highlight the recent pull-back in fuel (prices) which will provide a tailwind as we go through the year,” said analyst Donal O’Neill of Goodbody Stockbrokers. – (Reuters)