Lufthansa Sees Higher Earnings Potential From Efficiency Program

Deutsche Lufthansa AG (LHA), Europe’s second-largest airline, raised its estimate for potential earnings from its efficiency program by 300 million euro ($393 million).

The company’s combined 2,500 projects under a program dubbed “Score” have the potential to contribute 2.71 billion euros to operating profit over three years, up from 2.41 billion euros a month ago, the company said in a presentation today on its website.

Lufthansa plans to increase operating profit by 1.5 billion euros by 2015 through the program in an effort to generate enough funds to buy more fuel-efficient planes and new seats as it competes with Gulf carriers boasting fleets with about half the average age of Lufthansa’s.

The plan targets 740 million euros in gross earnings contribution this year, while Lufthansa at the end of April had identified projects that may be able to provide 954 million euros. That compares with an estimate for 900 million euros on May 14.

Costs for the various projects will amount to a “low-three- digit million euro amount” to be realized in the fourth quarter this year, and to a “mid-three-digit million euro amount” next year, according to the presentation. 2015 will also see project costs, which will be lower than in the previous year.

Having identified projects with an earnings potential of 2.71 billion euros means leeway to compensate for headwinds and “melt-down effects,” according to the presentation.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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