March 12, 2014 / 2:35 PM / 5 years ago

Lufthansa to spin off frequent-flyer programme in revamp

FRANKFURT, March 12 (Reuters) - Lufthansa plans to spin off its Miles & More frequent-flyer programme as a separate subsidiary in its efforts to boost the scheme’s revenue and profit, Germany’s largest airline said on Wednesday.

Loyalty programmes traditionally reward passengers with discounts on air travel, based on the number of miles they have flown with a particular airline. But in recent years airlines have been able to generate cash by selling reward miles or points to other businesses, such as credit card and car rental companies, which offer them to attract customers.

“Miles & More ... will become more attractive for customers through additional programme partners,” Lufthansa said. “Revenue and profit should grow continuously level in the coming years.”

Lufthansa is not the first to hive off its loyalty scheme. Air Canada did so in 2007 and Germany’s second-largest carrier Air Berlin sold 70 percent of its Topbonus programme to shareholder Etihad Airways in December 2012.

The move forms part of a wider restructuring at Lufthansa, which is aiming to increase operating profit to 2.3 billion euros ($3.2 billion) in 2015. The company is due to report 2013 results on Thursday.

Lufthansa said that its frequent-flyer programme, which has more than 25 million members, would be merged with its Lufthansa WorldShop retailer and operated in an independent company under the name Miles & More GmbH.

The plan requires approval at the company’s annual shareholder meeting on April 29. ($1 = 0.7212 euros) (Reporting by Victoria Bryan; Editing by David Goodman)

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