03.05.2016, 11:44
Lufthansa Group with Earnings Improvement in First Quarter
OREANDA-NEWS. The earnings improvement of Lufthansa Group’s in the first quarter is driven by Lufthansa Passenger Airlines and Austrian Airlines. All other operating companies in the Group reported lower results. The Adjusted EBIT of Lufthansa Passenger Airlines increased by EUR 244 million, while Austrian Airlines posted a EUR 23 million improvement. The Adjusted EBIT at SWISS was down EUR 28 million, owing largely to a decline in demand in the face of the strong Swiss franc. Eurowings, the results of which are reported separately for the first time, achieved a first-quarter Adjusted EBIT that was EUR 33 million below its prior-year level. This reflects the start-up costs of the company’s long-haul operations and the costs for its structural setup.
Lufthansa Cargo suffered a substantial EUR 71 million decline in its first quarter Adjusted EBIT. Sizeable overcapacity particularly on transatlantic routes and low demand led to a contraction of cargo revenues by 21.8 per cent. Lufthansa Cargo is bracing itself for a challenging financial year: the Adjusted EBIT is now expected to be significantly below its 2015 level. An additional cost reduction program was launched some weeks ago. First quarter results of the MRO and catering segments were in total EUR 20 million below their prior year levels.
The Lufthansa Group’s result forecast for the year remains unchanged: the Group expects to achieve an Adjusted EBIT slightly above the previous year result of EUR 1.8 billion. This forecast does not, however, include the negative result impacts of possible strike actions. The Group does not expect to see any easing of the pricing pressures in the passenger and cargo transport sectors. Yields are under particular pressure on services to and from South America, as a result of the region’s currently weak economies. In the Asia traffic region lower booking volumes from Chinese and Japanese travel groups lead to lower volumes. In contrast, Europe and North America – Lufthansa’s biggest and most important traffic regions – are both showing more stable trends.
“The trends we have seen in the last few months are likely to continue throughout the present quarter,” concludes Simone Menne. “The intensity of the competition and the resulting pricing pressures will not ease – not least because of the low fuel costs. This is why it is important that we continue to work consistently on our cost positions. We remain fully committed to our goal of reducing our unit costs this year net of fuel and currency impacts.”
Lufthansa Cargo suffered a substantial EUR 71 million decline in its first quarter Adjusted EBIT. Sizeable overcapacity particularly on transatlantic routes and low demand led to a contraction of cargo revenues by 21.8 per cent. Lufthansa Cargo is bracing itself for a challenging financial year: the Adjusted EBIT is now expected to be significantly below its 2015 level. An additional cost reduction program was launched some weeks ago. First quarter results of the MRO and catering segments were in total EUR 20 million below their prior year levels.
The Lufthansa Group’s result forecast for the year remains unchanged: the Group expects to achieve an Adjusted EBIT slightly above the previous year result of EUR 1.8 billion. This forecast does not, however, include the negative result impacts of possible strike actions. The Group does not expect to see any easing of the pricing pressures in the passenger and cargo transport sectors. Yields are under particular pressure on services to and from South America, as a result of the region’s currently weak economies. In the Asia traffic region lower booking volumes from Chinese and Japanese travel groups lead to lower volumes. In contrast, Europe and North America – Lufthansa’s biggest and most important traffic regions – are both showing more stable trends.
“The trends we have seen in the last few months are likely to continue throughout the present quarter,” concludes Simone Menne. “The intensity of the competition and the resulting pricing pressures will not ease – not least because of the low fuel costs. This is why it is important that we continue to work consistently on our cost positions. We remain fully committed to our goal of reducing our unit costs this year net of fuel and currency impacts.”
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