German airline Lufthansa is about to sell its IT infrastructure unit to IBM as part of an outsourcing agreement for the services.
Europe’s largest airline by revenue is undergoing restructuring and cost-cutting efforts to better position itself to compete with low-cost carriers and Arabic rivals
It earlier this year said it was seeking a buyer for the unit, which provides data centres, networks and telephony. Apparently, it is worried that it requires a high level of investment and economies of scale, which the airline could not afford.
Under the deal, Lufthansa will outsource all of its IT infrastructure services to IBM for seven years. The US firm will take over the airline’s IT infrastructure division, currently part of Lufthansa Systems.
The deal will result in a one-off pre-tax charge of 240 million euro for Lufthansa. It will allow Lufthansa to reduce its annual IT costs by around 70 million euro a year. It is not clear how much this will all cost in the end as this is still being ironed out.
