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Europe's airline sector is prime for consolidation: Lufthansa CEO

Key Points
  • Airline industry players have been facing a slowdown in profits on the back of higher costs and global trade wars.
  • Lufthansa is expecting single-digit earnings growth for the year, saying it is optimistic, despite posting a pre-tax loss for the first quarter of 336 million euros ($376 million).
Lufthansa airplanes at waiting position on the first of a two-day strike at Frankfurt Airport on November 23, 2016 in Frankfurt, Germany.
Getty Images

SEOUL — Europe's airline industry is ready for consolidation, and Lufthansa expects to be part of the action, the German airline's CEO told CNBC's Chery Kang on Sunday.

"There is a need and room for more consolidation in Europe. Probably looking at North America somewhat shows how the industry could develop," Carsten Spohr said during the International Air Transport Association (IATA) AGM in Seoul.

Lufthansa has been an active participant in the mergers and acquisitions (M&A) space, with Spohr pointing to previous activity with Swiss Air, Austrian Airlines, and Brussels Airlines.

"We have been active on this for many years," he said. "If there are opportunities, we surely will be ready."

The carrier currently has a bid in for Thomas Cook's Condor unit, which Lufthansa previously sold its shareholding to Thomas Cook between 2000 and 2007.

At this year's IATA AGM, industry players have been facing a slowdown in profits on the back of higher costs and global trade wars. Lufthansa is expecting single-digit earnings growth for the year, saying it is optimistic, despite posting a pre-tax loss for the first quarter of 336 million euros ($376 million).

"We had a disappointing (first) quarter in Europe, mostly dominated by overcapacity. But with strong booking outlook for the summer, we maintain optimism for the rest of the year."

Meanwhile the carrier has switched its focus to profitability from capacity growth when it comes to its low cost carrier, Eurowings, which Spohr said had been the growth driver for the group.

"We made sure we achieved the market position in important markets, and we are now going for profitability which has been somewhat neglected for the past years while we made sure we achieved strategic position."