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Lufthansa CEO predicts loss at cargo division

GERMAN carrier Deutsche Lufthansa's chief executive said he now sees an operating loss for the company's cargo business as the global economic crisis continues to pummel the aviation industry.

"It is apparent that the (cargo) market will remain at this extremely low level," Wolfgang Mayrhuber said at the company's annual shareholders' meeting yesterday.

Air cargo companies have been buffeted by spending curbs by businesses and slumping demand for goods around the world. The International Air Transport Association said last month, though, that the industry may have found its floor.

Lufthansa's freight volume fell almost 20 percent in March after declines of close to 25 percent in each of the previous two months. The Asia-Pacific region has especially seen a dramatic slump in air cargo demand.

United States-based United Parcel Service, which delivers packages and documents around the world, said on Thursday that its second-quarter outlook could miss expectations and that a recovery was not likely before 2010.

Rival DHL told Reuters news agency it had seen its Asia business stabilizing since March, offering hope that negative fallout from the crisis may be starting to ease.

Mayrhuber said he was still unable to give a concrete outlook for 2009 group profit. He said he still saw operating profit falling from last year's 1.35 billion euros (US$1.78 billion) but clearly remaining in positive territory.

"The year 2009 will really put us to the test," he said.

Shares of Lufthansa were down 1.3 percent at 9.515 euros in early trading.

Airlines are struggling to remain profitable as businesses and consumers cut travel during the recession. The industry will sell fewer seats this spring than last year, IATA said in March.

Lufthansa last year led the pack in European airline consolidation by agreeing to buy loss-making Austrian Airlines, Brussels Airlines and a majority of BMI.

Both Brussels Airlines and Austrian Airlines had been hit badly by the weak demand for air travel and were working on measures to counter the slump, Mayrhuber said. But they would hopefully soon lift synergies from the mergers.

The carrier's two closest rivals, British Airways and Air France-KLM, are both expected to post losses this year.


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