Lufthansa to hike airfares, cut costs

Germany’s biggest airline Lufthansa recently indicated that it is bracing to hike airfares amid a looming financial turmoil it is currently confronting.

Lufthansa flights will become costly in future even as the airline warned that its total profits will face another decline in 2012, following a loss of $17 million in 2011.

The airline in a statement said it has to suffer losses because of the ongoing European debt crisis, high fuel costs, and stiff competition for the negative profits.

Middle Eastern carriers such as Emirates and Etihad Airways, and UK’s low cost carrier Ryanair have emerged as biggest rivals of Lufthansa and giving it a tough competition and eating into its profits.

Lufthansa also disclosed that it has initiated process to sell its under-performing UK subsidiary BMI (British Midland International), a major contributor to the losses last year.

Christoph Franz, CEO of Lufthansa, said a new cost savings program called SCORE is on the anvil. He also said that airfares will also be hikes soon. He revealed that the purpose of SCORE program is to improve the company’s profit by 1.97 billion by 2014.