Deutsche Lufthansa AG, Europe's second-biggest airline, said it will continue to expand through alliances and partnerships apart from planned organic growth at its hubs. The Cologne, Germany- based airline is a founding member of the Star Alliance, the world's biggest airline grouping.

''The result for the first quarter has built a solid base for the full year,'' Lufthansa said, adding that it still aims to match last year's record operating profit of 1.38 billion euros ($2.14 billion) by cutting costs and raising prices through fuel surcharges.

Lufthansa rose 2.2 per cent in Frankfurt trading.

The carrier also said that it is planning to cooperate with Chicago-based UAL Corp.'s United Airlines, another Star member and the world's second-largest carrier, as well as Houston-based Continental Airlines Inc. The two American carriers announced an extensive ''global cooperation'' programme about a week back

Lufthansa's intention to ''co-operate'' with the American carriers is an affirmation of the statement made in March this year by chief executive officer, Wolfgang Mayrhuber, who said that industry consolidation is ``inevitable'' and that Lufthansa should play a role.

Amongst the measures being contemplated by the carrier is restrictions on hiring and cuts in administrative costs of at least 15 per cent.

Lufthansa said it is confident that ``demand for mobility will continue to increase and that, despite fluctuations, air traffic will carry on growing.''

It, however, warned that rising jet-fuel prices ``represent a considerable challenge for the airline industry.''

Globally, airlines are expected to report combined losses of $6.1 billion this year.

Lufthansa has hedged 85 per cent of its anticipated fuel needs for 2008, officials said, and will likely spend about 5.63 billion euros ($8.82 billion) on jet fuel this year.