Lufthansa Chief Exec: “Aviation Industry in a Very Desperate Situation”

The airline industry is in a desperate situation, according to Deutsche Lufthansa AG chief executive Wolfgang Mayrhuber.

Mr. Mayrhuber called the airline industry´s situation “desperate” as analysts warned Europe´s biggest carriers won´t be able to escape the impact of $65-a-barrel oil for much longer.

“This industry is in a very, very desperate situation,” Mr. Mayrhuber reportedly said. “We are increasing our revenue while decreasing our market cap.”

Lufthansa, Air France-KLM Group and British Airways Plc may see passengers rebel against fuel surcharges, which are as much as $125 on long-haul round trips, while the carriers´ oil hedging contracts cover less of their higher costs.

In an interview published in Forbes magazine, Mr. Mayrhuber reportedly said that there´s no reason for a downgrade of Lufthansa shares and earnings estimates. “We´re strong and healthy, and we´ll stay that way.”

According to Forbes, Deutsche Lufthansa AG “does not see skyrocketing kerosene/jet fuel prices threatening its full year target of more than €400 million operating profit,” attributing it to Wirtschafts Woche weekly, citing chief executive Wolfgang Mayrhuber.

“The strong rise in fuel prices is an enormous cost burden,” Mayrhuber reportedly told the magazine. “But we can shoulder this burden faster and more effectively than others.” He also said the company currently has no indication its full year 2006 target will be impacted.