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Lufthansa's profit dives

DEUTSCHE Lufthansa AG, Europe's second-largest airline, said profit fell 64 percent in 2008, and predicted earnings would drop again this year.

Net income fell to 599 million euros (US$757 million), or 1.31 euros a share, from 1.66 billion euros, or 3.61 euros, a year earlier, Cologne-based Lufthansa said yesterday in its annual report. Operating profit will be "considerably lower" than last year's 1.35 billion euros, while remaining "distinctly positive."

Lufthansa has failed to reduce capacity fast enough to match an accelerating decline in demand stemming from the worldwide economic contraction. The load factor, or proportion of seats filled with paying passengers, fell 3.3 percentage points last month, even as the airline scaled back capacity by 5.7 percent, Bloomberg News said.

"The forecast isn't very concrete," said Martina Noss, an analyst with NordLB in Hanover. "That operating profit would fall was absolutely to be expected. They're going to have to do more cost-cutting and may have to ground planes."

The airline's group passenger traffic, the number of travelers multiplied by distance flown, fell 0.1 percent from a year earlier in December. The decline has accelerated, with the company reporting a 9.8-percent drop in February.


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