* Christoph Franz to succeed Wolfgang Mayrhuber from Jan. 1
* Franz' appointment widely expected
* Carsten Spohr succeeds Franz as head of passenger business
(Adds details, background)
FRANKFURT, Sept 22 (Reuters) - Lufthansa named Christoph Franz as its new chief executive, succeeding Wolfgang Mayrhuber from Jan. 1, 2011.
The move had been widely expected since Franz, 50, was appointed deputy CEO a year and a half ago. Austrian-born Mayrhuber is expected to retire next year, having managed Lufthansa for seven years.
Lufthansa Cargo CEO Carsten Spohr, 43, is taking over management of Lufthansa's flagship passenger airline business, Germany's biggest carrier said on Wednesday.
Franz, a former executive at Deutsche Bahn railways, had come to Lufthansa via Swiss, which Lufthansa bought five years ago in the biggest airline merger since Air France took over KLM Royal Dutch Airlines.
He proved himself as a turnaround expert by bringing back Swiss from the brink and has been put to the test since he was put in charge of Lufthansa's passenger airline business in 2009.
The global airlines industry lost almost $10 billion amid the global economic crisis last year, and Franz tackled the slump by ruthlessly cutting costs.
One of his first big projects after joining Lufthansa's management board had been initiating the "Climb 2011" cost-cutting programme aimed at saving 1 billion euros at the passenger airline business by the end of 2011.
Franz made waves when he told German media late last year Lufthansa was planning to install thinner seats in its planes to add capacity, a profitability-boosting strategy borrowed from low-cost carriers such as Ryanair or EasyJet.
As the global economy recovers, Lufthansa may stand to reap the benefits of its leaner business as it battles Air France-KLM and British Airways for European pole position.
The International Air Transport Association (IATA) on Tuesday sharply hiked its forecast for industry profits this year as recession fades, but warned that new capacity could cut profits as soon as 2011. (Reporting by Maria Sheahan)