The German flag carrier reported a 170-per cent rise in cumulative net earnings in the first nine months of 1998 to 1,272 billion marks.

"In 1998 we will break through a new barrier to post pre-tax profits of more than two billion marks. On conclusion of the third quarter, our profits from ordinary activities already match our full-year results in 1997," group chairman and chief executive Juergen Weber said in a speech.

However, Weber said that the overall climate was less favourable for next year.

"But, again from the stance of a pilot looking ahead I can also say: the weather radar is not showing the clear blue skies of 1997, with the prospect of staying that way well into the next millennium," Weber said.

Falling average yields could be expected on all markets, which means that further increases in earnings cannot automatically be assumed for next year, the group said.

"In view of the deteriorating market growth, raising productivity and lowering unit costs remain the primary objectives of the Lufthansa group," Lufthansa said.

Weber said that the Star Alliance, which also includes United Airlines, SAS, Air Canada, Thai and Varig, was "gaining a growing advantage."

"And with the inclusion of ANA, Anset and Air New Zealand next year, it will raise its quality in the Asia-Pacific region to the highest level," Weber said.

The group's chief financial officer, Karl-Ludwig Kley, said that the main focus of turnover was traffic revenue from passengers and freight.

Kley said that the trend in passenger business was "particularly gratifying", growing by 5.2 per cent to 11.5 billion marks. The group's CityLine unit saw its business grow by 18.7 per cent, Kley said.

"The passenger load factor of the group's airlines improved to the new record level of 73.4 per cent," Kley said.

He said that the Asian crisis made itself felt for the first time in the third quarter.

"By optimising capacity we succeeded in maintaining the rate of utilisation of our aircraft at a high level. However, price shortfalls dented the earnings from the Asian region," Kley said.

The freight business also saw a turnover decline, as it is more sensitive to developments in world trade than the passenger business.

Kley said that the group would adopt IAS (International Accounting Standards) for the full-year 1998 figures.