Sale of BMI takes its toll on Lufthansa

City A.M. Reporter
DEUTSCHE Lufthansa posted a net loss of €13m (£10.86m) in 2011, after taking a larger-than-expected charge on the sale of its British Midland unit.

British Airways owner IAG in December agreed to buy Lufthansa’s British Midland for £172.5m in the race to grab the loss-making unit’s coveted runway slots at London Heathrow.

A loss of €285m from discontinued operations “reflects current losses at British Midland and valuation effects linked to its disposal”, the German airline said in an unscheduled statement yesterday.

Analysts on average had expected a full-year net profit of €324m, according to a Thomson Reuters poll, following a net profit of €1.1bn a year earlier.

The German flagship carrier also said it would pay a dividend of €0.25 – almost half analysts’ expectations of €0.47 – as an exception to its dividend policy.

“This is intended to let shareholders participate in the successful operating performance in the reporting year in a way that is justifiable to the financial profile,” the group said.

Meanwhile, Franco-Dutch airline Air France KLM, which yesterday announced it was suspending all flights to Damascus due to the worsening security situation in Syria, said passenger traffic for February rose 6.2 per cent despite a strike action that hit its European network.

But cargo traffic fell 5.1 per cent, hit by the weak economy.

Air France KLM shares were up one per cent to €4.18.

Lufthansa shares wavered slightly before closing flat at €10.02.