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Lufthansa Group raises operating profit for first half-year

Staff writer ▼ | August 1, 2014
Deutsche Lufthansa AG reports an operating profit of EUR 114 million for the first six months of 2014, an improvement of EUR 41 million on the EUR 73 million of the same period last year.
Lufthansa
Airliner   German company had an improvement of 41 million euros
Total revenue for the period amounted to EUR 14.2 billion, a decline of just under 2.1%. Adjusted to exclude non-recurring expenditure totalling some EUR 105 million – for such actions as the accelerated installation of the new Lufthansa Business Class seating and provisions relating to the Score programme – the first-half operating result amounted to EUR 219 million, a EUR 75 million year-on-year improvement.

The prime reasons for the improved result were the positive impact of the new depreciation policy for aircraft and spare engines which was adopted at the beginning of the year and the enhanced cost structures in the passenger business segment. The net result for the first half-year amounted to EUR -79 million, a EUR 124 million improvement on the prior-year period.

The positive impact of enhanced cost structures and lower depreciation needs was countered by factors which contrived to lower operating profits, particularly in the second-quarter period.

Overcapacities – especially on North and South American services, on European routes and, more recently, on Asia-Pacific routes – prompted price declines in both the passenger and the cargo segment. The strike in April by Vereinigung Cockpit pilots’ union at Lufthansa also eroded EUR 60 million from the first-half group operating result, while the impairments required on outstanding receivables in the recently-devalued Venezuelan bolivar removed a further EUR 61 million.

The Group has already responded to the declines in passenger and cargo revenues by reducing its planned further seat-kilometre capacity growth from the original 5% to 3%.

The first-half operating result for the Passenger Airline Group amounted to EUR -96 million, a EUR 32 million decline on the prior-year period. Lufthansa and Germanwings reported a first-half operating result of EUR -146 million (down EUR 55 million), while Austrian Airlines posted an operating result of EUR -44 million (down EUR 9 million). Swiss reported a first-half operating profit of EUR 92 million, a EUR 29 million improvement on the prior-year period.

Lufthansa Technik achieved a first-half operating profit of EUR 206 million, only EUR 13 million below the high level of the prior-year period. LSG SkyChefs reported a first-half operating profit of EUR 18 million, largely in line with prior-year levels, and IT Services raised its first-half operating result by EUR 6 million to EUR 11 million.

The Lufthansa Group aims to increase the share of total revenues which is contributed by its service business segments, its new businesses and its new platforms (including the new WINGS multi-platform concept for point-to-point air services away from the Group’s major hubs) from the present 30% to 40% between now and 2020.

This goal is part of a broader raft of measures, including quality and innovation drives, through which the Group aims to participate even more substantially in the further growth of the aviation sector.


 

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