Outlook


Lufthansa Systems adapts its structures to market developments

Even as the global economy picks up again, companies in all industries are faced with the challenge of cutting their costs sustainably and improving their adaptability in a volatile economic environment. One prerequisite for doing so is further optimisation of business processes, for which the IT sector plays a key role, irrespective of the industry.

With innovative, technologically advanced products and all-round IT competence, Lufthansa Systems helps its customers inside and outside the airline industry to make the necessary changes by offering them solutions with great utility. This means that the company, its products and its know-how are well positioned in terms of customer needs.

Airlines are faced with a particular need to increase their efficiency and flexibility in order to combat competitive pressure and price erosion. There is nevertheless no sign that IT spending in the airline industry will increase significantly in the years ahead. The overall IT market is under considerable and sustained pressure to change as a result of many factors. Key technological drivers are cutting-edge technologies such as tablet PCs and cloud computing. However, by making targeted investments in IT infrastructure and product development, Lufthansa Systems is nevertheless creating the conditions for its customers to benefit from the advantages of new technologies.

Revenue for Lufthansa Systems is initially expected to contract further in 2011 and 2012. The main reason is the switch to new technologies that are cheaper for customers. This is exacerbated by the termination of contracts in connection with the clear-out of the portfolio. Both can only partly be recouped by new business. Lufthansa Systems will therefore have to adapt its production structures to this process of change. Management positions and other jobs are to be shed in 2011 as part of the Jetzt! programme in order to reduce costs lastingly. At the same time, Lufthansa Systems will invest in additional training for its staff to expand their range of qualifications and meet the conditions for flourishing in other markets alongside air transport.

As well as paring down administration and reducing interfaces in the Lufthansa Systems Group, the aim is to increase competitiveness by cutting development, maintenance and operating costs. In some cases implementation of these measures began in 2010. The merger of five subsidiaries with Lufthansa Systems AG planned for early 2011 will play a key role in reducing costs and complexity. This set of measures is expected to reverse the earnings trend in 2011. In 2012 the operating result should rise further.

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