Out-Law / Your Daily Need-To-Know

Lufthansa IT arm attracts partnership interest from global IT companies

Out-Law News | 25 Apr 2014 | 10:32 am | 1 min. read

Lufthansa's attempt to find a partner for its Lufthansa Systems IT infrastructure division has attracted interest from a number of large technology groups, Reuters has reported.

IBM, Hewlett Packard and the French company Atos have expressed an interest in the German airline's IT arm, which employs 1,400 people, a source familiar with the matter has disclosed to the news agency.

"We are in talks with several sector heavyweights about a takeover of the IT infrastructure, and we want to secure most of the jobs following a sale," Lufthansa's chief financial officer Simone Menne told German paper Frankfurter Allgemeine Zeitung, according to Reuters.

Earlier this month Lufthansa announced plans to split Lufthansa Systems into three separate companies - an infrastructure division, an Airline Solutions division and an Industry Solutions division.

"This will involve transitioning the infrastructure division into a partnership with an international IT service provider as part of the Group IT outsourcing process," said a statement by the company at the time. "The Lufthansa Group will then contract out its infrastructure services to the new partner as part of a long-term agreement to create growth opportunities for the business and new prospects for the employees."

Lufthansa said that the Lufthansa Systems' Airline Solutions division, which offers IT solutions for the aviation sector, and the Industry Solutions division, which focuses on IT solutions and systems integration for the German professional services sector, will be retained as independent companies operating within the Lufthansa Group.

Lufthansa said the proposed partnership is designed to secure IT expertise and experience in the long term for the Lufthansa Group itself and for the other Lufthansa Systems divisions, and its  approximately 450 customers.

"The IT infrastructure services market needs a high level of investment because it demands a steady stream of product portfolio improvements and strong, sustained growth," the statement continued.  "Economies of scale are a key competitive factor. In the future, these are to be achieved by working with a major IT services provider operating on a global scale."

Lufthansa expects non-binding offers to be made in May, said Reuters, while analysts expect bids in the tens of million euros. The company said it hopes to complete a deal by the end of 2014.

A spokesman for Deutsche Telekom's T-Systems said it was not interested in buying Lufthansa systems, although according to the Reuters source it had considered the sale at one point.

IBM and Hewlett Packard declined to comment, Reuters said, while Atos was not available for immediate comment.