Lufthansa Signs Seven-Year IT Contract With IBM for EUR1 Billion

By Natalia Drozdiak

FRANKFURT--International Business Machines Corp. Tuesday said it signed a 1 billion euro ($1.25 billion) outsourcing deal with Deutsche Lufthansa AG to deliver IT services to the German airline over a seven-year period.

Germany's largest airline had said in October that it was close to selling its IT infrastructure unit to IBM and outsourcing its IT services to the company. Lufthansa said the move would help cut costs by about EUR70 million a year, but would result in a one-off EUR240 million charge this year.

IBM said it plans to revamp the airline's IT process and bring in leading technologies to make it more efficient. It said around 1,400 Lufthansa employees will transfer to IBM with services set to begin in April 2015.

The move is part of Lufthansa's broader efforts to cut costs after earlier restructuring measures failed to deliver its promised profit improvement. Its intensive restructuring program, dubbed Score, was initiated in 2012 and led to thousands of job losses and aimed to slash operating costs by EUR1.5 billion by 2015.

The agreement is still subject to approval of Lufthansa's supervisory board and antitrust regulators.

Write to Natalia Drozdiak at [e-mail]

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