FRANKFURT Deutsche Lufthansa announced a bigger than expected 2010 dividend after a one-time tax effect and steady economic recovery boosted its bottom line, sending its shares higher.
Germany's flagship carrier said on Wednesday it would propose paying shareholders a dividend of 0.60 euros per share, almost 40 percent more than the Thomson Reuters I/B/E/S consensus of 0.43 euros, after paying none a year earlier.
"The dividend is good news," a Frankfurt-based trader, who declined to be named, said, adding the news was encouraging investors.
Lufthansa stock was up 3.2 percent at 15.09 euros by 1308 GMT, outperforming the STOXX Europe 600 Travel & Leisure index, which was up 1.8 percent.
Lufthansa swung to a 2010 net profit of 1.1 billion euros ($1.53 billion) that was more than double the consensus of 485 million, helped by a 400 million-euros one-time tax effect and economic recovery.
Lufthansa is due to publish full 2010 results on March 17, at which time it is also expected to comment on its expectations for 2011.
The company said in October it expected business to remain strong into 2011 after demand for international premium class travel and cargo services improved in the quarter up to the end of September.
But since then, soaring oil prices have become a concern to travel-related companies.
International oil prices hit a 2-1/2 year high recently, with U.S. crude staying above $100 per barrel on unrest in Libya that comes in the wake of protests in other countries in the region including Egypt and Tunisia.
Industry body IATA has said it expects global airlines' net profits to halve to $8.6 billion this year as rising costs, especially oil prices, offset increasing demand.
Cathay Pacific earlier on Wednesday warned that high oil prices could hurt its results this year, and analysts said they expected the Hong Kong-based carrier would follow rivals including Qantas Airways in raising its fuel surcharge.
(Additional reporting by Josie Cox; Editing by Mike Nesbit)