Lufthansa Systems maintains its position in a difficult environment

Lufthansa Systems today announced a positive operating result for the year 2010 despite a difficult economic environment and significant one-off costs. The company posted revenues of EUR 595 million, which was around 1.7 percent below the previous year. Of this, revenues with external customers amounted to EUR 232 million (-4.9 percent). There was a slight increase in revenues with Lufthansa Group companies to EUR 363 million (+0.6 percent), which is primarily due to consolidation effects. The operating result decreased by 37.5 percent to EUR 10 million. Lufthansa Systems employed an average of 2,974 employees (-2.2 percent) in the past year.

“Given our customers’ reluctance to make investments, we can be satisfied with this result,” commented Stefan Hansen, CEO of Lufthansa Systems AG. “Yet it also documents the fact that we must take strong measures to ensure that Lufthansa Systems can continue to develop and safeguard its leading position in the market.”

In response to increasing consolidation in the IT industry and growing competitive pressure, Lufthansa Systems in the second half 2010 initiated a program to realign the company. Titled “Jetzt!” (“Now!”), the program aims to cut costs by EUR 25 million and generate an equal amount of additional revenues by June 30, 2011. Lufthansa Systems is also being reorganized to ensure medium-term growth and long-term profitability.

The company will establish three profit centers that are oriented on its customer groups. The centers will be directly responsible to their customers for projects and services. Infrastructure operations will work as a cost center. Cross-disciplinary functions are being bundled together in Lufthansa Systems AG and made available to every division.

“Our products contributed to making many of our customers stronger and more competitive than before the economic crisis. By realigning Lufthansa Systems, we want to further improve our ability to support our customers in dealing with the challenges of their markets,” said Hansen.

Lufthansa Systems again was able to expand its business with new and existing customers in 2010. The company’s integrated platform solutions that cover all of an airline’s core processes were an important factor in this context. Transaero, for instance, opted to control its flight operations with the Integrated Operations Control Center (IOCC) Platform. With its navigation solutions, Lufthansa Systems was able to further expand its market position as well. Lido/Flight, the company’s powerful flight planning solution, is a particularly effective way for airlines to generate significant fuel savings and reduce their ecological footprint noticeably. Important agreements on the extension of server and application operations were also signed with Lufthansa and Lufthansa Cargo.

Outside of the airline industry, the Hamburg Port Authority contracted Lufthansa Systems to update its rail freight IT environment at the Port of Hamburg. Lufthansa Systems developed a concept for replacing the current operations and information system and will implement the new integration platform by 2012. The company’s extensive experience with complex logistics systems enables it to prepare the rail infrastructure at the Port of Hamburg for further growth.

As the world economy picks up again, companies in all sectors face the challenge of permanently lowering their costs and improving their ability to adapt to volatile economic conditions. For this to be possible, they have to optimize their business processes – and regardless of the industry, IT will play a key role in this.

Lufthansa Systems’ innovative, cutting-edge solutions and extensive IT expertise help airlines and other customers to make the changes they need to succeed by offering solutions with a clear economic benefit and a quick return on investment. With its products and its expertise, Lufthansa Systems is well-positioned to meet its customers’ requirements.

The IT market is constantly under intense pressure to change. This change is driven by technologies such as cloud computing and mobilization based on tablet PCs and similar products. “By investing significantly in IT infrastructure and product development, we enable our customers to take advantage of the benefits offered by these new technologies,” said Hansen.

Lufthansa Systems’ revenues will continue to decline in 2011 as the company migrates to new technologies which are more cost-efficient for its customers. Additionally, some contracts will be terminated as Lufthansa Systems adjusts its portfolio. The Jetzt! program, in contrast, will result in sustained cost reductions and generate additional revenues. Lufthansa Systems therefore expects earnings to turn around in 2011.