The plan, while called oneTUI and intended to cut overlaps
between the two, does not mean another attempt at a merger with
TUI Travel, Chief Executive Friedrich Joussen said on Wednesday.

“OneTUI is designed to get more out of the existing
structure of the group. It’s not an M&A programme,” he told
journalists.

The structure of TUI AG and 56-percent owned unit TUI
Travel, which includes one headquarter in London and one in
Hanover, is complicated and costly. TUI Travel’s tour operators
include brands such as Thomson and Crystal Ski, while TUI AG
operates its own cruises and is Europe’s leading operator of
leisure hotels.

Analysts and investors have suggested a merger would be the
best way of reducing overlap, but TUI AG decided against making
an offer for the remainder of TUI Travel earlier this year,
saying it made no sense at current share prices. ID:nL6N0AS1SJ]

Instead, Joussen, CEO for 100 days, said TUI AG would cut
costs by 40 percent at its headquarters in Hanover, restructure
or sell underperforming resorts, such as the Castelfalfi in
Toscana, fix problems at loss-making Hapag-Lloyd Cruises and
increase cooperation with TUI Travel.

“We will be ruthless and divest if things are not working,”
Joussen told analysts.

Measures agreed with TUI Travel’s CEO Peter Long include
increasing use of the TUI brand across hotel assets, working
more closely on online strategy and setting up a joint staff
talent programme, Joussen said.

DIVIDEND

Shares in TUI AG rose 2.4 percent to the top of the MDax
index for mid-caps in Germany on news of the reshuffle
and dividend policy. TUI Travel was up 2 pct.

TUI AG has not offered a dividend since a 2007 payout of
0.25 euros, although previous CEO Michael Frenzel had back in
2011 indicated a payout could be on the way soon.

Joussen said the group was targeting operating profit of
around 1 billion euros ($1.3 billion) by the 2014/15 financial
year and a cash balance, currently negative, of around 100
million.

The group then intends to pay out half of its net cash flow
as dividends, Joussen said.

Separately, the group posted a second quarter underlying
loss before interest, tax and amortisation (EBITA) of 197
million euros, matching expectations in a Reuters poll.

It lifted its forecast for the year, saying it now expected
underlying EBITA to improve from the record 745.7 million euros
in 2011/2012, after a strong performance from TUI Travel.

The group is undergoing its biggest reorganisation in 20
years after suffering a 70 percent drop in net profit last year
and last month hired a new chief executive from Danish jeweller
Pandora to inspire its recovery.

For the first quarter of this year it posted a 2.3 percent
decline in group sales, along with shrinking profit margins and
a bigger than expected 23 percent fall in operating profit,
forcing it to downgrade its targets for the year.

The results contrast with those of rival Adidas AG
, which earlier this month reported its highest ever
gross profit margin amid strong sales of higher-priced products,
such as its new Boost running shoe.

“It was a rough quarter,” said Chief Financial Officer
Michael Laemmermann, who is acting CEO following the departure
of Franz Koch at the end of March.

He said Puma – supplier of shirts for German top flight
soccer club Borussia Dortmund, who play Bayern Munich in this
year’s European Champions League Final – was especially hurt by
falling sales in Europe, China and a poor performance in
footwear, its biggest category.

The group, controlled by French luxury goods group PPR
and which also sponsors top sprinter Usain Bolt, now
predicts sales will fall between 1 and 5 percent this year,
rather than match last year’s level of 3.27 billion euros ($4.3
billion).

It also said it would not meet its target to increase
operating profit (EBIT) before special items by a low- to mid-
single digit amount.

For the first quarter, EBIT fell to a lower than expected 79
million euros, compared with average expectations for 93
million.

Shares in the group dropped around 3 percent at the open but
recovered later and were trading down 0.7 percent at 231.05
euros by 1011 GMT.

“With these results it all makes sense as to why the
previous CEO had to leave after two years,” said one analyst who
declined to be named.

CLEAN BREAK

PPR, which also owns Gucci and which has seen Puma’s results
knock the performance of its sports and lifestyle division in
recent quarters, has shaken up management at the German firm.

It is bringing in as CEO Bjorn Gulden, who helped revive the
fortunes of Pandora and which on Tuesday beat forecasts for
first-quarter earnings.

Jean-Francois Palus, managing director of PPR and chairman
of Puma, said at last week’s annual shareholders’ meeting that
Puma needed a clean break from the legacy of Jochen Zeitz, the
former CEO who led the company for 18 years and placed its focus
on fashionable lifestyle products.

Laemmermann said Puma needed to work on marketing its brand
and pushing its more technical products for sportsmen and women.

He also said Gulden’s experience at Adidas and shoe retailer
Deichmann would prove especially useful after sales in the
footwear segment fell 8 percent in the quarter and it was forced
to keep discounting shoes to get them off the shelves.

Puma, which launched its new Mobium running shoe this year,
said its gross profit margin narrowed to 49.1 percent from 51.2
percent, hit by currency effects and the footwear discounts.

Puma is also playing catch-up in producing shoes and kit for
money-spinning sports like soccer, where Adidas and Nike
are market leaders, and has pulled out of what it sees as less
lucrative sports like rugby in Europe and sailing.

The group has reportedly signed a deal to provide the kit
for British team Arsenal. Laemmermann refused to comment on the
reported Arsenal deal.

“It’s never too late,” said the analyst. “They’ve achieved a
much bigger turnaround, compared with what has to be done now.”
($1 = 0.7703 euros)

(Editing by Mark Potter and David Holmes)

Despite a 2 percent fall in sales in the first quarter, with
fewer big sporting events than the year before, operating profit
at the world’s second-largest sports apparel maker behind Nike
rose by a greater-than-expected 8 percent to 442 million
euros ($578 million).

The group said its new Boost running shoes, priced at around
$150 a pair, had almost completely sold out in several countries
in the first four weeks of sales and that it was struggling to
keep up with demand.

“Unfortunately we don’t have enough supply at the moment,”
Chief Executive Herbert Hainer told analysts on Friday.

He said partner BASF, the chemical company that
developed the shoe’s cushioning foam, would increase production
during the year, enabling Adidas to put more of the shoes into
shops and launch a similar basketball shoe.

Adidas is hoping Boost will help it gain more customers in
the United States, the world’s biggest footwear market. The
company, based in the small German town of Herzogenaurach where
two brothers formed the Adidas and Puma shoe companies,
currently has only 11 to 12 percent of the U.S. market.

Adidas shares jumped 7.5 percent to a record high of 85.63
euros after it said its gross profit margin had widened 2.4
percentage points to 50.1 percent, the second time it has ever
reported a figure above 50 percent.

REEBOK DRAG

The higher profits overshadowed a slight cut in the sales
growth forecast for its Reebok-CCM division, which combines
shoe, clothing and fitness brand Reebok and hockey brand CCM.
The group now estimates the business will see sales grow by less
than 10 percent in 2013.

First-quarter sales at Reebok fell 14 percent on a
currency-neutral basis.

Adidas has been grappling with problems at Reebok for over a
year and took a 265 million euro writedown on the brand at the
end of last year.

Reebok lost a big contract with the National Football League
in the United States; fraud was uncovered at its Indian
operations; and it was hurt by a lockout by U.S. hockey players
at the end of last year.

Hainer said Reebok, which is focussing on sports such as
yoga, dance and fitness training, would return to growth this
year. It expected a turnaround in the third quarter when the
U.S. back to school season starts and students rush to buy new
sports gear.

DZ Bank analyst Herbert Sturm described the results as
excellent. “The most important news of today is that the Adidas
Group is able to deliver margin improvements in a difficult
market environment,” he wrote in a note.

Adidas also confirmed its expectations for full-year
earnings per share to rise by 12 to 16 percent.

Amazon employs around 9,000 people across Germany and has
come under fire from trade union Verdi for refusing to implement
a collective agreement on employment conditions, in keeping with
the country’s other mail order and retail firms.

The union is also pressing for higher basic pay and bigger
supplements for night shifts.

Amazon workers in the eastern city of Leipzig voted in
favour of strike action earlier this month and staff at Bad
Hersfeld, a town in central Germany where 3,700 are employed,
joined them on Monday.

Verdi said almost 98 percent of those taking part in the
ballot at Bad Hersfeld voted in favour of strike action.

“Amazon’s management should … finally start talks on a
collective agreement,” the union’s negotiator Bernhard
Schiederig said.

A strike, which would delay deliveries to customers, could
come within weeks, Schiederig told Reuters, although no date has
been set.

Schiederig also told Reuters he thought a site visit by Peer
Steinbrueck, the opposition Social Democrat candidate for
chancellor, to Bad Hersfeld on Monday, where he met Amazon
Germany boss Ralf Kleber and labour representatives, had gone
well.

But he said management had again refused to enter
negotiations on a collective agreement, though said they were
happy to hold further talks with Verdi.

In Leipzig, the union is calling for starting pay of 10.66
euros ($13.89) an hour, compared with 9.30 euros now. In Bad
Hersfeld, they want pay of 9.83 euro to be increased to 12.18.

Amazon Germany was not immediately available for comment on
Monday. It has previously said that it pays wages that are
competitive.

The online retailer hit headlines in Germany in February
after it employed security staff from a company linked to a
neo-Nazi group who were bullying its employees.

Amazon has since terminated the contract, saying it
regretted the events.

Lufthansa scrapped 1,700 flights, leaving only about 30 running, after all-day strike action was announced at Germany’s biggest airports, including Frankfurt, Munich and Hamburg.

Unlike other strikes over the past couple of years, Lufthansa even said it was cancelling the majority of its long-haul flights.

“That’s 150,000 passengers we are unable to carry today,” Lufthansa personnel executive Stefan Lauer said, standing in front of a departure board at Frankfurt showing a swath of cancelled flights.

Germany’s airports and railways have been hit with repeated strike action over the past two years, from pilots to tower staff, airfield workers, security staff and train drivers.

The emergence of smaller trade unions and years of pay restraint have resulted in tense negotiations and the increased number of strikes.

“We want to call on the union to end this madness. Germany’s transport sector is becoming the laughing stock of Europe,” Lauer said.

Frankfurt airport, Europe’s third largest, was largely calm and free of long queues on Monday morning, in contrast to last month’s five-hour strike.

The high number of cancellations on Monday meant that many passengers had either stayed home or had not been able to fly to the airport, which mostly serves transfer passengers.

Horst Hoffart, 45, was one of the lucky few whose flight was still taking off. “There have been too many strikes recently,” he said.

Guenter Grabherr, a 54-year-old Austrian travelling with his wife to Tobago on rival airline Condor (TCG.L: Quote, Profile, Research, Stock Buzz), said they had expected a German company like Lufthansa to be more reliable. “It’s terrible for the passengers who just want to get away,” he said.

WHISTLES AND BANNERS

Monday’s strike action affects all Germany’s major airports, including Munich, Hamburg and Berlin. Striking workers comprised cabin crew and ground staff at Lufthansa Cargo, Lufthansa Technik, Lufthansa Systems, catering unit LSG Sky Chefs and ground crews.

In Frankfurt alone, 2,000 Lufthansa employees started the industrial action at 11:00 p.m. EDT. They marched through Terminal 1 blowing whistles and waving flags during the morning, chanting that they were being “robbed” of pay.

Trade union Verdi, which represents 33,000 workers, is asking for a 5.2 percent pay rise and job guarantees. It hopes the strikes will put pressure on management to improve an offer it has described as “scandalous”.

The extent of the strike is unusual, given that the sides are still in the early stages of negotiations. Short warning strikes are a common tactic in German pay talks, but Lufthansa has complained that full-day action is out of proportion.

The airline, in the middle of a restructuring program, made a new offer last week to raise salaries by 1.2 percent from October and a further 0.5 percent a year later, in a deal that would run for 29 months and would not contain job guarantees.

Non-German passengers at Frankfurt were unaware of the reasons behind the strike and interested only in getting on a flight. “I want my Rome vacation,” said one American waiting in the rebooking queue.

Lufthansa estimates that the strike will cost it tens of millions of euros.

Its shares, however, were up 2 percent at 0931 GMT, leaving market watchers bemused.

“I can only think that the market is hoping that Lufthansa will take a hard line in the negotiations and that any pay increase will not be as high as that demanded by Verdi,” one Frankfurt-based trader said.

(Additional reporting by Reuters TV and Daniela Pegna; Editing by Mark Potter and David Goodman)

Lufthansa said the planned action, which would see workers walk off their jobs for a full day at several airports – including Europe’s third largest at Frankfurt – goes far beyond a regular “warning strike” and would cost the airline tens of millions of euros.

Warning strikes are a common tool in German pay disputes and are usually a shorter form of action before an all-out strike is declared.

Lufthansa has used the courts before to prevent strikes going ahead in previous disputes, such as those with pilots and air traffic controllers.

“It’s completely out of proportion,” a Lufthansa spokesman said. “Especially given that four further dates for pay talks had already been agreed upon.”

Staff represented by Verdi have already held a one-day strike on March 21, forcing Lufthansa to cancel nearly 40 percent of its flights for the day.

Verdi, representing about 33,000 employees, has described a pay offer put forward by Lufthansa management on Wednesday as “scandalous” and said that it would represent a drop in pay in real terms over the next 12 months.

Lufthansa’s offer was to raise salaries by 1.2 percent from October this year and a further 0.5 percent a year later, in a deal that would run for 29 months and would not contain job guarantees.

COST-CUTTING

Like European peers Air France-KLM and SAS, Lufthansa is trying to keep down staff costs as it battles competition from low-cost carriers and fast-growing rivals from the Gulf.

Verdi is demanding a 5.2 percent pay rise for cabin crew and ground staff at Lufthansa Cargo, Lufthansa Technik, Lufthansa Systems, catering unit LSG Sky Chefs and ground crews. It also wants a commitment by Lufthansa to safeguard jobs.

Further talks have been arranged for April 29-30 and June 2-3.

Friday’s call for industrial action was for full-day strikes at Frankfurt, Munich, Hamburg, Stuttgart, Hanover, Duesseldorf, Cologne and Norderstedt.

Workers have been asked to strike during the morning in Nuremberg and until 0830 ET in Berlin.

Lufthansa earlier said it was too early to predict the exact impact on Monday’s flight schedule but said that there would be delays and cancellations.

“We will, of course, put the necessary measures into place,” a spokesman said just after the strike was announced.

Lufthansa shares were down 0.6 percent at 13.91 euros at 05.33 ET, underperforming a 0.4 percent rise in the Dax.

(Editing by Christoph Steitz and David Goodman)

Bjorn Gulden has revived the fortunes of Pandora (PNDORA.CO: Quote, Profile, Research) in the year he has been in charge, more than doubling the share price and pushing sales up 53 percent.

The 47-year-old was also previously head of apparel and accessories at Adidas, experience he will need as he tries to return Puma to profit growth and build it into the global leisure brand envisaged by its French owner PPR (PRTP.PA: Quote, Profile, Research).

PPR has been looking for a new CEO for Puma since the departure of Franz Koch was announced in December, just two weeks after PPR’s Jean-Francois Palus took the top spot on Puma’s supervisory board. Koch stepped down at the end of March, after less than two years in the job.

Last year, Puma’s net profit fell 70 percent, forcing it to cut its dividend by three quarters, shelve certain products and pull out of less lucrative sponsor deals like sailing and rugby.

“Gulden has successfully executed the (Pandora) board’s strategy and turned the sales-out figures from negative to positive in Pandora’s four biggest markets,” Nykredit Markets analyst Kresten Johnsen said on Thursday referring to what customers buy from Pandora shops.

Pandora’s four biggest markets are the United States, the United Kingdom, Germany and Australia.

Europe, the Middle East and Africa accounts for 40 percent of sales at Puma.

Shares in Pandora have gained nearly 140 percent since Gulden arrived in March 2012. They fell 5 percent on news of his departure. Puma stock was up 0.6 percent.

“This has been a very hard decision for me to make. Pandora is a great business which is performing well, but the sports industry has always been a major part of my life, and my role at Puma will also allow my family to remain in Germany,” Gulden said.

Gulden, a Norwegian, was a former professional football player in Norway and at German club 1. FC Nuremberg, until a serious injury forced him to stop.

He spent eight years at Adidas and was part of the team that took the company public in 1995.

Puma and Adidas are both based in Herzogenaurach, southern Germany, having been founded in the late 1940s by two brothers who had fallen out with each other.

Gulden was also managing director of shoe company Deichmann and did a stint at Norwegian sportswear brand Helly Hansen. He starts at Puma on July 1.

“From his CV, it looks a good fit. His biggest challenge will be to assert Puma amongst the tough competition and improve profits, because margins have been falling,” said one analyst who declined to be named.

Footwear is Puma’s biggest division by sales, but the gross profit margin declined to 46.5 percent from 49.1 percent in 2012 after hefty discounting.

Allan Leighton, Pandora’s chairman and a veteran British businessman with years of experience in consumer goods and retail, will take over as CEO.

(Additional reporting by Maria Sheahan in Hamburg and; Keith Weir in London. Editing by Erica Billingham)

Bjorn Gulden has revived the fortunes of Pandora
in the year he has been in charge, more than doubling the share
price and pushing sales up 53 percent.

The 47-year-old was also previously head of apparel and
accessories at Adidas, experience he will need as he tries to
return Puma to profit growth and build it into the global
leisure brand envisaged by its French owner PPR.

PPR has been looking for a new CEO for Puma since the
departure of Franz Koch was announced in December, just two
weeks after PPR’s Jean-Francois Palus took the top spot on
Puma’s supervisory board. Koch stepped down at the end of March,
after less than two years in the job.

Last year, Puma’s net profit fell 70 percent, forcing it to
cut its dividend by three quarters, shelve certain products and
pull out of less lucrative sponsor deals like sailing and rugby.

“Gulden has successfully executed the (Pandora) board’s
strategy and turned the sales-out figures from negative to
positive in Pandora’s four biggest markets,” Nykredit Markets
analyst Kresten Johnsen said on Thursday refering to what
customers buy from Pandora shops.

Pandora’s four biggest markets are the United States, the
United Kingdom, Germany and Australia.

Europe, the Middle East and Africa accounts for 40 percent
of sales at Puma.

Shares in Pandora have gained nearly 140 percent since
Gulden arrived in March 2012. They fell 5 percent on news of his
departure. Puma stock was up 0.6 percent.

“This has been a very hard decision for me to make. Pandora
is a great business which is performing well, but the sports
industry has always been a major part of my life, and my role at
Puma will also allow my family to remain in Germany,” Gulden
said.

Gulden, a Norwegian, was a former professional soccer player
in Norway and at German club 1. FC Nuremberg, until a serious
injury forced him to stop.

He spent eight years at Adidas and was part of the team that
took the company public in 1995.

Puma and Adidas are both based in Herzogenaurach, southern
Germany, having been founded in the late 1940s by two brothers
who had fallen out with each other.

Gulden was also managing director of shoe company Deichmann
and did a stint at Norwegian sportswear brand Helly Hansen. He
starts at Puma on July 1.

“From his CV, it looks a good fit. His biggest challenge
will be to assert Puma amongst the tough competition and improve
profits, because margins have been falling,” said one analyst
who declined to be named.

Footwear is Puma’s biggest division by sales, but the gross
profit margin declined to 46.5 percent from 49.1 percent in 2012
after hefty discounting.

Allan Leighton, Pandora’s chairman and a veteran British
businessman with years of experience in consumer goods and
retail, will take over as CEO.

City authorities in Vienna this month released a review of
the Austrian capital’s gay and lesbian tourism strategy,
deciding to focus on travellers interested in music, culture and
history — and with money to spend.

The review followed a study among gay and lesbian travellers
from outside of Vienna that found their average household’s
monthly net income was 385 euros ($500) higher than that of
other tourists to Vienna.

Clemens Koeltringer, marketing analyst from the Vienna
Tourists Board, said this target group was “high profile, luxury
customers who go to the opera and enjoy very good food”.

“Vienna is not a Mykonos, it must not be,” Koeltringer told
Reuters, referring to the Greek party destination. “This is the
main reason we are differentiating ourselves.”

Vienna is not alone in identifying the potential of the gay
and lesbian market.

Lesbian, gay, bisexual and transgender (LGBT) leisure travel
is forecast to rise almost 10 percent to $181 billion in 2013,
according to an LGBT Travel Report 2013 by marketing specialist
Out Now Global.

Germany, Bulgaria and Greece were among other destinations
promoting gay friendly credentials at the world’s leading travel
trade show, the ITB Travel Fair, in Berlin earlier this month.

For example VisitBerlin, in joint partnership with
participating hotels, launched the Pink Pillow Berlin
Collection, a hotel network designed for lesbian, gay, bisexual
and transgender (LGBT) guests.

Stefan Dimitrov, a PR consultant from Bulgaria, said he
noticed a sharp increase in visitors to the gay section of the
Sunny Beach resort on the Black Sea and set up a blog then a
website offering travel tips and tour packages.

“It’s still my hobby at the moment,” he told Reuters. “I
don’t know if it will work out but the interest here at ITB has
been so huge I’ve had to get all the flyers and advertising
reprinted.”

GROWING SECTOR

Miguel Gallego, a spokesman from the European Travel
Commission (ETC), said Madrid, Barcelona, San Sebastian and
Sitges in Spain already had strategies to attract more LGBT
visitors, recognising it as an important, lucrative sector.

Briand Bedford-Eichler, managing editor of the Spartacus
guide for gay-friendly accommodation, said acceptance of the gay
sector had increased — as well as awareness that gay travellers
tend to holiday three to five times a year, and for more than
just short breaks.

“More people want to offer products, because they realise
it’s quite a lucrative market,” he told Reuters.

“Gay people are still travelling and still spending. It’s a
niche that hasn’t been too affected by the crisis.”

An official guide to Vienna for gay and lesbian visitors
states the city is more gay-oriented than people might imagine.

Vienna has allowed civil partnerships since January 2010,
meaning gay couples can choose settings such as the former
imperial residence Schoenbrunn palace to tie the knot in a civil
ceremony then stay on for their honeymoon.

The city suggests walking tours to take in the Belvedere
Palace, built by Prince Eugene of Savoy, a Habsburg general who
historians widely agreed was gay, and the Vienna State Opera
house, designed by two gay architects, one of whom committed
suicide in 1868 after the building was criticised.

“The most impotant thing to leverage is the imperial
heritage. Vienna is known and is world famous for music and
culture, and the gay and lesbian segments are not different in
(enjoying) that,” said Koeltringer.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Travel Postcard on gay Vienna
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

($1 = 0.7737 euros)

(Editing by Belinda Goldsmith)

Two non-executive directors also walked away after what all
three “perceived to be a breakdown in relations with the major
shareholder Hochtief,” Leighton said in a statement on Friday.

The exit of Chairman Stephen Johns and non-executive
directors Wayne Osborn and Ian Macfarlane sent shares in
Australia’s biggest construction company down almost 7 percent
to near a two-month low.

The departures also highlighted conflict with a director
appointed by Hochtief’s parent, Spanish group ACS.

In his letter of resignation, Johns said there had been
conflict with Hochtief chief Marcelino Fernandez Verdes, a close
confidant of ACS CEO and Chairman Florentino Perez.

ACS has strengthened its control over Hochtief’s management
since it acquired a majority stake in Germany’s largest builder
in 2011.

Verdes was appointed CEO of Hochtief in November to lead a
strategy review and has been on the Leighton board since
October.

Johns said Verdes had interfered in the appointment of an
independent director, which subsequently did not go ahead, and
that Verdes then requested his resignation as chairman.

“These actions gave rise to serious concerns that Hochtief
no longer supported the important principle of board
independence,” Johns wrote.

In a later statement, issued after it became aware the
letters of resignation had been made available to the media,
Leighton said it did not agree with the conclusions drawn by the
resigning directors.

“There have been a series of events in recent months which
are open to interpretation,” it said, adding the remaining
Australian directors had no “specific information” that Hochtief
no longer supported the independence of Leighton’s board.

FULL SUPPORT

Hochtief, for its part, said it was in full support of the
remaining Leighton management, including Chief Executive Hamish
Gordon Tyrwhitt and finance chief Peter Allan Gregg.

“Hochtief appreciates having independent members on the
Leighton Board,” a spokesman told Reuters.

ACS declined to comment.

Leighton’s share price fall wiped more than $527 million
from the value of the $7.6 billion company. Market regulator the
Australian Securities and Investments Commission said it was
aware of Leighton’s share movement and had talked with the stock
exchange, but declined to give more details.

Some analysts said the stock’s reaction reflected the loss
of a respected independent chairman and the risk that minority
shareholders would be less vocally represented.

The resignations leave the board with two independent
directors, three non-executives, plus the CEO and CFO.

“Stephen Johns is a highly respected chairman, and his
departure will be taken negatively,” said an analyst who
declined to be identified because of the sensitivity of the
subject.

Leighton operates under an independent board and management
according to the arrangement between the company and Hochtief,
which owns 53.4 percent of Leighton, the company said, declining
to give further details.

“There has been a lot of changes in the Hochtief appointees,
just a whole (bunch) of new people coming to the board,” said
Shane Delphine, an investment manager at Karara Capital, which
owns shares in Leighton.

“They are more aligned to the old Hochtief management,” he
said, referring to the three directors who had resigned.

Leighton shares closed down 6.9 percent at A$20.20, after
dropping as low as A$19.51, their lowest in nearly two months.

Leighton said its board would meet this weekend to elect a
new chairman.
($1 = 0.9580 Australian dollars)

(Additional reporting by Matthias Inverardi in Frankfurt and
Clare Kane in Madrid; Editing by Daniel Magnowski and David
Holmes)