Lufthansa to pay first dividend since 1989

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Lufthansa, the German national carrier 51 per cent owned by the state, is expected to make a profit this year and pay a dividend for the first time since 1989, Jurgen Weber, its chief executive, said.

The extensive cost-cutting measures of the past three years have significantly improved efficiency, Mr Weber told Finanzen magazine.

Lufthansa is seeking to raise about DM1.5bn ( pounds 600m) in fresh capital. This would form part of a radical restructuring, which depends on the company being privatised, Mr Weber said.

This new money was urgently needed to strengthen the company's low capital base, and to help to finance the company's investments amounting to DM1bn a year, he said.

Preliminary figures for 1993 show that Lufthansa narrowed its net loss by more than two-thirds to DM110m.

The only large obstacle standing in the way of privatisation is disagreement over the airline's pension fund.

At present, the airline's pension fund is part of a general trust, the BVL, for public servants. If Lufthansa staff are not to suffer a large cut in their pension entitlements at privatisation, then between DM3bn and DM4bn must be paid into a new company pension fund.

Given that Lufthansa cannot afford such sums, it is up to the state, as the chief shareholder, to come up with money, Mr Weber said.