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Lufthansa personnel chief to leave as job cuts bite

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(Globalpost/GlobalPost)

By Marilyn Gerlach

FRANKFURT (Reuters) - Lufthansa's <LHAG.DE> board member for personnel is to leave by the end of June and could be replaced by two executives as the German airline pushes through a deep restructuring that involves thousands of job cuts.

German weekly magazine Der Spiegel, citing no sources, said on Monday Lufthansa would revamp its management board, with Lauer's job to be split in two.

"It is true that changes will happen," Chief Executive Christoph Franz told newspaper Sueddeutsche Zeitung, confirming that Lauer would leave the company by mid-year.

Apart from overseeing human resources, Lauer is also responsible for Lufthansa's other airline units, like Austrian Airlines, Brussels Airlines and SWISS. Der Spiegel said the two tasks would be overseen by two people.

"If indeed his job would be split up, it would imply the personnel job is demanding and onerous. It shows Lufthansa is serious in this whole restructuring," said airline analyst Donal O'Neill of Irish stockbroking firm Goodbody.

Lufthansa is cutting 3,500 jobs, revamping low-cost carrier Germanwings and bundling procurement for its airlines. It hopes its restructuring programme, dubbed SCORE, will help boost operating profit to 2.3 billion euros (1.9 billion pounds) in 2015 from 524 million last year.

Lauer is negotiating with unions representing around 33,000 workers who went on strike last week to push through demands for a 5.2 percent wage hike.

"His departure is interesting from the timing point of view. They're in the throes of negotiations and he has a pretty big influence on the negotiations. I don't think he's being fired," O'Neill said.

Around 18,000 cabin crew went on strike in August and September last year after a bitter pay dispute that lasted more than a year. Both parties eventually agreed last November to a mediator's proposal for a pay rise of more than 4 percent.

A German newspaper first reported Lauer's likely departure in March, saying he would remain as a consultant to help deepen cooperation with Turkish Airlines <THYAO.IS>.

Der Spiegel said the supervisory board would make a decision on the board changes at an extraordinary meeting to be held in early May.

Shares in Lufthansa, which declined to comment on the report, closed 0.5 percent higher at 15.75 euros, in line with an index of European travel and leisure companies <.SXTP>.

Franz told Sueddeutsche Zeitung that Lufthansa would wait until its minority owned unit Brussels Airlines has turned a profit before acquiring the remaining 55 percent of its shares.

Lufthansa bought 45 percent of Brussels Airlines in 2008 and secured options to buy the rest of the Belgian carrier by 2014.

"A complete takeover will result when the turnaround is complete and Brussels can firmly stand on its own two legs," he said.

Whereas Lufthansa unit Austrian Airlines expects to post a profit this year, Franz gave no specific forecast for when the Belgian carrier would do so.

Franz said Europe's airlines as a whole were making losses because of a rise in kerosene prices and a decline in net ticket prices, adding that Lufthansa was also losing money in its European passenger business.

"Currently we expect that we will probably have to pay a little bit less for kerosene this year," he told the paper.

($1 = 0.7694 euros)

(Reporting By Marilyn Gerlach and Christiaan Hetzner; Editing by Tom Pfeiffer)

http://www.globalpost.com/dispatch/news/thomson-reuters/130325/lufthansa-personnel-chief-leave-job-cuts-bite