Lufthansa May Scrap 1,000 Posts at Biggest Inflight Caterer

Deutsche Lufthansa AG (LHA) said it may cut as many as 1,000 jobs at LSG Sky Chefs, the world’s biggest inflight caterer, as part of a plan to shave 1.5 billion euros ($1.9 billion) from group-wide expenses through 2014.

The number of posts to be scrapped has yet to be determined and Lufthansa will initially seek to eliminate headcount by not replacing people who leave, spokeswoman Josefine Corsten said by telephone from Frankfurt, where the company has its main hub.

Europe’s second-biggest airline, which had a 381 million- euro operating losses in the first quarter, is already cutting 3,500 administrative positions, or 20 percent of the total, while exploring plans to combine short-haul operations outside of Frankfurt and Munich with its low-cost division Germanwings.

The timing of the cuts at LSG Sky Chefs, which had 29,600 employees globally at the end of last year, according to Lufthansa’s annual report, depends on how capacity and customer demand develops, Corsten said. The unit has around 200 kitchens worldwide, ranking it No. 1 ahead of Gategroup Holding AG. (GATE)

Shares of Lufthansa fell as much as 1 percent and were trading 0.3 percent lower at 8.65 euros as of 10:38 a.m. in Frankfurt. The stock has declined 5.8 percent this year, valuing the Cologne-based carrier at 3.96 billion euros.

Global Reach

Assuming its current name after Lufthansa completed the takeover of U.S.-based Sky Chefs in 2001, the catering unit provides more than 400 million meals each year for 300 airlines around the world, and has a market share as high as 40 percent in the U.S. and Europe, according to its website.

About three-quarters of its 2.3 billion euros in annual revenue comes from outside the Lufthansa group, with growth slowing to 2.2 percent in 2011 from 7 percent the year before as network carriers in North America and Europe cut spending.

Still, operating profit grew 12 percent in 2011 to 85 million euros and growth opportunities are being created as airlines in Asia, the Middle East and Africa look to outsource food provision, the annual report says, predicting that the unit will boost revenue and earnings this year and next.

Lufthansa, which employs 120,000 people worldwide, has begun a savings program dubbed SCORE -- from Synergies, Costs, Organization, Revenues, Execution -- after completing a package that shaved 1 billion euros from expenses through 2011.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.