Europe's struggling airline industry received a shot in the arm yesterday when German carrier Lufthansa raised its profits forecast for the year and ordered 10 new Airbus jets

Hammered by the slump in demand since last September's terrorist attacks on the US, European airlines have savaged costs, including thousands of jobs and planned orders, to restore profitability. Lufthansa's forecast that its operating profits this year would be €500m (£314m) - compared with the €400m it predicted at its June annual meeting - propelled British Airways' shares skywards. They closed up 11p, or 7.4%, at 160p - the third highest rise in the FTSE 100 on the day. The boost to BA's stock came ahead of tomorrow's first-quarter figures, which are expected to show pre-tax profits of around £80m - compared with the £200m pre-tax losses for the whole of 2001 and £50m earnings in the first quarter a year ago. The airline also announced changes to its winter schedule which increase services to lucrative destinations such as New York and switch more routes from Gatwick to Heathrow in order to regain profitability. BA is increasing daily sub-sonic flights from Heathrow to New York from six to seven and weekly flights to Cape Town from seven to 10 among the changes, which will see capacity static compared with 2001. Lufthansa said it would buy 10 Airbus A330-300s for delivery in 2004, prompting Airbus to claim it had so far won 76% of the medium to long range market so far this year.