Lufthansa is getting out of the IT business, in a deal whereby IBM will buy the German airline's infrastructure business and takes over its in-house IT.

Running IT and selling IT services is not an airline's  core business, Deutsche Lufthansa AG has decided, leading to the break-up of its systems integration business, and the transfer of 1400 staff to IBM. Outsourcing its internal IT to IBM will save the company €70 million per year.

Taking off
Lufthansa’s IT infrastructure division has bout 450 customers, and provides data centers and networking for companies mostly in the global aviation industry. Lufthansa will incur a €240m one-time charge to seal the deal due to restructuring and effects from the purchase price in the financial year 2014. Sites at Kelsterbach and Budapest.

Lufthansa Systems will be split into three companies, and its Airline Solutions and Industry Solutions divisions will become independent companies, pending the approval of the Lufthansa Supervisory Board and the antitrust authorities.

Deutsche Lufthansa AG CFO and member of the executive board and Chairperson of the Supervisory Board of Lufthansa Systems AG Simone Menne said: “the cooperation with a global and successful IT group like IBM will strengthen the competitiveness of the Group companies and the Lufthansa Group as a whole. It will directly improve our cost base and allows access to the latest IT technologies which we will use to continue digitizing our business processes in order to increase efficiency and customer focus.”

The split-up of Lufthansa Systems and formal launch of the new companies are due to take place in Q1 2015 and the completion of the infrastructure sale is planned for March 31, 2015. It has not been disclosed how much the deal is worth.