Tuesday October 4, 2005

Lufthansa Group Chairman and CEO Wolfgang Mayrhuber is no fan of the European Commission`s proposal to bring air transport into the EU`s Greenhouse Gas Emissions Trading Scheme.

``There will be a lot of new bureaucracy built up which is not necessary,`` Mayrhuber told ATWOnline while stressing that improving the aviation infrastructure is the way to help the environment. He pointed out that every day Lufthansa wastes fuel equivalent to 11 Frankfurt-New York flights in holding patterns over German airports. Observing that the A380 was planned, built and flown in less time than it is taking to add a third runway at Frankfurt, he said, ``There must be something wrong.``

In a wide-ranging discussion, he also reiterated that Lufthansa expects to achieve an operating profit (EBIT) for 2005 of around €400 million ($481 million), no small achievement in the face of soaring energy prices and tough competition from low-fare carriers. Nevertheless, he believes this is inadequate given the carrier`s revenue base. ``We would like to have €1 billion EBIT as fast and soon as possible. Because you never know what happens next [in aviation],`` he said.

Lufthansa saved €606 million in the last 16 months. ``We have €25 million in debts. That`s nothing for an airline like Lufthansa. But we have €3.5 billion cash,`` Mayrhuber said, adding that the carrier plans to reinvest some of its cash in innovation and new aircraft.

Talking about the integration of Swiss, he said the process is working very well, but Swiss has to stop losing money as soon as possible.

Mayrhuber believes Lufthansa is well-positioned for the inevitable seasonal downturn beginning in October and does not see a need to reduce capacity, particularly in the German market. ``Our focus is on expanding operations,`` he said, citing cities such as Stuttgart, Dusseldorf and Hamburg. Beginning with the winter schedule, LH is increasing capacity to Eastern Europe by 25% compared to last year.

On the long-haul side, further growth is on the radar. ``For example, in India we could see up to seven new destinations in about three years time.``

On a down note, the airline has been forced to suspend replacement of business class seats on its long-haul fleet owing to problems with the inflight entertainment system. ``As long as we don`t have the situation in line, the process is stopped,`` Mayrhuber said. ``We expect a new software by October.`` So far, more than 30 aircraft offer the new business class and two more should follow soon.

by Kurt Hofmann