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Lufthansa said Thursday that its profits are likely to decline slightly this year due to rising fuel costs and lower flight fares.

The German carrier said efforts to reduce costs would not be enough to offset an expected 350-million-euro (375-million-dollar) increase in fuel costs and pressure to reduce tickets prices.

"In 2017 it remains necessary to further reduce our costs," Lufthansa CEO Carsten Spohr said in a statement.

"This is the only way to meet and master the decline in unit revenues and the higher fuel expenses, and at the same time to maintain and strengthen our financial stability and our investment capacities," he added.

Lufthansa posted total revenues of 31.7 billion euros in 2016 - a drop of 1.2 per cent on the previous year. Net profit increased by 4.6 per cent to just short of 1.8 billion euros last year.

The news comes one day after Lufthansa reached a long-sought agreement in a dispute with its pilots over pay and pensions.

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