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Aviation

Lufthansa scraps dividend, buys new aircraft

Lufthansa airline has announced plans to buy more than a hundred new planes in the next decade. The spending drive is to be financed through savings in staff and shareholder payments.

Lufthansa was planning to purchase another eight long-distance aircraft, as well as 100 short- and medium-haul planes from aircraft makers Airbus and Boeing, Europe's biggest carrier announced in a statement released late on Tuesday.

The orders would cost a total of 9 billion euros ($12.1 billion) and were scheduled to be carried out between 2015 and 2025, the statement said. The additional investment would boost Lufthansa's new orders for the period to 239 aircraft worth a total price of 23 billion euros.

Noting that Lufthansa wanted shareholders to participate sustainably in the group's success, the airline's chief executive, Christoph Franz, said dividend payment to shareholders would be cancelled for 2012 and net profit fully retained by the airline.

"It is now all the more important to invest all available resources in the group in order to drive the future investment program forward," Franz said.

Lufthansa staff pay price

Franz also announced a net profit of 990 million euros for 2012, which followed a loss of 13 million in the previous year of 2011.

Airlines struggle as costs and competition mount

However, the Lufthansa CEO said the profit came mostly from the sale of a number of equity investments and wasn't the result of better earnings from its core business.

Highlighting the need to "perform better," Franz said the airline would merge finance, purchasing and human resource activities, as well as close its head office in Cologne, which employs several hundred people.

In addition, some 350 workers would be made redundant at an office in Norderstedt, Germany, under efforts to make passenger business "leaner, faster and more flexible."

Squeezed by rising fuel prices and strong competition from low-cost carriers, Lufthansa has embarked on a major restructuring program aimed at lifting operating profit by 1.5 billion euros by 2015.

uhe/kms (AFP, AP, dpa, Reuters)

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