Swiss plans separate Geneva airline unit

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Lufthansa Group has offered a glimpse of planned initiatives for its 'Score' efficiency improvement programme, including the establishment of a separate operational unit for Swiss International Air Lines in Geneva.

Since the cost-cutting and revenue improvement scheme was launched in early 2012, 'Score' generated €618 million for the company, twice as much as expected. But Lufthansa says the positive effects were offset by higher costs, principally due to rising fuel prices.

Chief executive Christoph Franz said at the German airline group's annual press conference in Frankfurt on 14 March that the company would have made an operating loss in 2012 without the 'Score' savings.

For the current year, the management aims to generate €740 million and focus particularly on airline operations.

Lufthansa Group's €524 million operational profit in 2012 was largely based on the positive performance of the company's service subsidiaries - maintenance arm Lufthansa Technik, catering division LSG and IT specialist Lufthansa Systems. But the company's passenger and cargo airline operations should create the majority of the operating result this year, says Simone Menne, chief financial officer.

Group carrier Swiss will set up a separate operational unit in Geneva due to strong competition from low-cost carriers in the city, says Franz. Under the project dubbed 'Calvin', aircraft crews as well as certain operational and managerial posts will therefore be locally established.

Lufthansa's passenger airline division - which recorded a €45 million operating loss in 2012 - aims to return to profitability in the current year. This will be partly achieved with the transfer of all European traffic outside its Frankfurt and Munich hubs to low-cost subsidiary Germanwings on 1 July, which it is hoped will save around €200 million.

But the carrier will also cut around 2,000 jobs until the end of 2013. Some 3,500 jobs are to be made redundant across the entire group.

The management decided not to issue a shareholder dividend for 2012. Franz says that a dividend should only be paid again once the steady decline in the group's operating results since 2008 has been reversed.

Menne declined to specify whether a dividend will be issued for 2013.