FRANKFURT--International Business Machines Corp. Tuesday said it
signed a 1 billion euro ($1.25 billion) outsourcing deal with
Deutsche Lufthansa AG to deliver IT services to the German airline
over a seven-year period.
Germany's largest airline had said in October that it was close
to selling its IT infrastructure unit to IBM and outsourcing its IT
services to the company. Lufthansa said the move would help cut
costs by about EUR70 million a year, but would result in a one-off
EUR240 million charge this year.
IBM said it plans to revamp the airline's IT process and bring
in leading technologies to make it more efficient. It said around
1,400 Lufthansa employees will transfer to IBM with services set to
begin in April 2015.
The move is part of Lufthansa's broader efforts to cut costs
after earlier restructuring measures failed to deliver its promised
profit improvement. Its intensive restructuring program, dubbed
Score, was initiated in 2012 and led to thousands of job losses and
aimed to slash operating costs by EUR1.5 billion by 2015.
The agreement is still subject to approval of Lufthansa's
supervisory board and antitrust regulators.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
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