* Christoph Franz to be elected at March 4 annual meeting
* Franz has been Roche board member since 2011
* Departure comes as Lufthansa overhauls strategy
(Adds details on Lufthansa candidates, updates shares)
By Caroline Copley and Marilyn Gerlach
ZURICH/FRANKFURT Sept 16 Deutsche Lufthansa
Chief Executive Christoph Franz is leaving the airline
in the middle of a crucial strategic overhaul to join Swiss
drugmaker Roche as chairman of its board.
The move is a coup for Roche, the world's biggest maker of
cancer drugs. A central challenge for Franz will be to help the
company branch out beyond its core cancer expertise, which could
see it opening its war chest to boost its portfolio with mergers
However it comes in the middle of a complex restructuring
programme at German flag carrier Lufthansa to try to cope with
rising fuel costs and low-cost competition. The overhaul aims to
quadruple the carrier's operating profit to 2.3 billion euros by
2015 by cutting jobs, improving purchasing and merging its
European short haul business with discount unit Germanwings.
Roche has picked Franz to succeed Franz Humer as chairman.
He will stand for election at the company's annual shareholder
meeting on March 4, the drugmaker said on Monday.
The 53-year-old German will stand down from Lufthansa when
his term expires at the end of May, the airline said in a
"The departure of its CEO will be a huge blow for the
airline. Franz has been the mastermind behind the restructuring
and the renovation of Europe's largest airline group," said
Equinet analyst Jochen Rothenbacher.
The announced departure gives Franz eight months to press
ahead with the restructuring programme.
Reports suggested Lufthansa would pick an internal candidate
to replace him rather than bringing in an outsider, with the
favourite candidates all being long-serving managers.
However Franz said on Monday that the airline would not rule
out the possibility of looking at external candidates when
searching for his successor.
Shares in Lufthansa were trading up 0.8 percent 14.06 euros
by 1057 GMT, underperforming Germany's blue-chip DAX index
, which was up 1.2 percent. Roche shares were trading
0.6 percent higher at 238.3 Swiss francs, in line with the
European healthcare sector index.
Another of Franz's toughest challenges at Roche may be
negotiating with rival Novartis over the possible
repurchase of Novartis's stake in the company, analysts believe.
Novartis has also just appointed a new chairman and the
changing of the guard at Switzerland's two biggest drugmakers
has fuelled talk that Novartis may finally sell its
multi-billion-dollar stake in Roche.
The new chairman, although in a non-executive role, will
also have to navigate local politics as Swiss lawmakers hammer
out a new corporate tax law, and find his way in a global
industry in which some of Roche's top-selling medicines are
expected to face competition from cheaper copies from 2016.
"Roche is getting a chairman with outstanding personal
qualities and an impressive record as head of a major global
company," said Humer, who said he would not stand for
"I am sure that his extensive experience, exceptional global
network and strong links to Switzerland will be great assets."
Analyst Fabian Wenner at brokerage Kepler Cheuvreux said
Franz fitted the demands of Roche's family owners by being a
German speaker with the right cultural connections, but there
would be questions over his depth of knowledge of the drugs
The married father-of-five lives in Zurich, giving him the
Swiss local knowledge and business and political connections
deemed crucial for the Roche chairmanship.
Since he became Lufthansa CEO in January 2011, Franz has
clashed with labour unions several times. In May, his management
agreed an inflation-busting pay settlement for 33,000 of its
117,000 employees after the second labour strike in a month
threatened to drive customers to rival carriers.
Before becoming head of Lufthansa, Franz had been appointed
CEO of Swiss International Air lines by the German group after
it purchased the ailing carrier, and was responsible for leading
its recovery programme.
The Hoffman-Oeri family, descendents of Roche's founder
Fritz Hoffman-La Roche, hold 50.01 percent of the company's
shares and have a key say on who is chairman.
German newspaper Die Welt cited industry sources as saying
Carsten Spohr, the 46-year-old head of Lufthansa's passenger
airlines business and Lufthansa Cargo CEO Karl Ulrich Garnadt
were candidates to become the carrier's new chief executive.
Sueddeutsche Zeitung said Harry Hohmeister - in charge of
Lufthansa carriers Swiss, Austrian and Brussels Airlines - was
also in the frame.
(Additional reporting by Silke Koltrowitz in Zurich, Ben
Hirschler in London and Maria Sheahan in Frankfurt; Editing by