IBM seals $1.25bn outsourcing deal with Lufthansa

Lufthansa is outsourcing the majority of its IT infrastructure to IBM in a deal worth $1.25bn (€1bn) it was announced on Tuesday. Under the terms of the deal around 1,400 Lufthansa Systems employees will transfer to IBM.

According to IBM, "infrastructure services are scheduled to begin from IBM on April 1, 2015" - just under five months time.

As part of the outsourcing agreement, IBM will manage Lufthansa Systems' entire data center operations, help desk and printer services along with individual infrastructure services, the companies said.

As the companies point out, the deal is subject to "the approval of the Lufthansa Supervisory Board and antitrust authorities" but IBM will aim first to "optimise the airline's IT processes to increase efficiency".

The possible deal first became public last month. IBM said that it expected to generate, "an estimated cost savings ... of approximately €70m annually for the Lufthansa Group".

IBM said it will begin the "multi-stage transformation" of the Lufthansa IT landscape with new collaboration and messaging tools for social business plus new network and voice services and includes new strategic areas such as cloud computing, big data analytics or cognitive computing systems like Watson.

The transformation plan will directly improve Lufthansa's our cost base said Simone Menne, the CFO of Deutsche Lufthansa AG and chairperson of the airline's supervisory board. "We will have access to the latest IT technologies not only to lower our IT cost but also to continue digitalising our business processes in order to increase efficiency and customer focus."