Lufthansa targeting 'slight' improvement after rough 2009

Lufthansa yesterday released details of a year that ended with its first net loss in six years, a €112 million ($152.5 million) deficit that marked a reversal from the €542 million profit posted in 2008, but with an operating profit that reflected "broadly poised and ideally equipped" business segments, according to Chairman and CEO Wolfgang Mayrhuber.

Group revenue slipped 10.3% to €22.28 billion, a drop fueled by an 11.8% decline in traffic revenue to €17.6 billion. Operating result plunged 89.8% to €130 million from €1.28 billion in 2008, but remained positive.

"The past year's figures were burdened by economy-related weaker demand and the disproportionate decline in average yields in the passenger business segment that accompanied it," LH said. Mayrhuber said "targeted and swift evasive action to steer capacities and costs" helped mitigate the downturn's impact. The Climb 2011 savings initiative was launched in the 2009 third quarter and is targeting a €1 billion improvement by the end of 2011 (ATWOnline, July 17, 2009).

The Passenger Airline Group, which was enlarged last year with the additions of Austrian Airlines, Brussels Airlines and bmi, reported a €78 million full-year profit, down 90.9%, but an €8 million operating loss that compared to a €789 million surplus in 2008. Lufthansa Passenger Airlines' operating loss was €107 million, narrowed 11.8%. The group carried 76.5 million passengers, up 8.5%, on a 4.2% increase in RPKs to 160.65 billion. Capacity rose 5.5% to 206.27 billion ASKs, lowering load factor 1 point to 77.9%.

LH's March 28-Oct. 30 summer schedule will feature a 3.6% year-over-year increase in seat capacity owing to fleet renewal, a 0.1% decline in the number of weekly flights and a reduction in destinations to 204 from 206 last year. It will launch A380 service in June. New routes are Munich to Tashkent (thrice-weekly), Chisinau (daily), Rostock (twice-weekly), Zadar (weekly) and Bari (daily) and a daily Lufthansa Italia Milan Malpensa-Palermo service.

Lufthansa Cargo reported a €152 million loss, reversed from a €201 million profit in 2008, on a 32.9% drop in revenue to €1.95 billion. Lufthansa Technik earned €331 million last year, up 0.6%, and Lufthansa Systems suffered a 59% drop in profit to €16 million. LSG Sky Chefs earned €75 million, down 20.2%.

The company expects a "slight recovery" in revenue this year and warned that it is "foreseeable that [last year's acquisitions] will not yet contribute to the profitability of the group." It is targeting an improvement in the operating result. "No one can say how long it will take for us to make up for the current losses. A solid balance sheet, efficient capacity adjustments and the reduction of costs are, and will remain, the decisive factors for success," Mayrhuber concluded.