LH reports falling third-quarter profit, forecasts full-year improvement

Lufthansa Group released its expanded third-quarter and nine-month results yesterday, confirming Wednesday's announcement that it posted a €329 million ($413.7 million) third-quarter profit attributable to shareholders, down 20.9% from the €416 million earned in the year-ago quarter.

LH said it was "well on course" despite the drop, citing an improved operating result, rising yields and an "ongoing upswing in demand." It forecast an operating profit of €750 million for the full year, a 30% increase over the €577 million earned in 2005.

Group revenues climbed 10.8% to €5.33 billion and EBITDA fell 27.6% to €879 million. Operating profit rose to €394 million from €218 million, an increase of 80.7%. Over the year's first nine months, the group was €414 million in the black, nearly level with the €416 million earned in the year-ago period. Revenue grew 12.9% to €14.98 billion and operating result surged 46.7% to a €691 million profit from €471 million.

During the nine-month period, Lufthansa's Passenger Transportation segment--which includes the mainline as well as Lufthansa CityLine, Air Dolomiti, Eurowings Group, Contact Air and Augsburg Airways--enjoyed a 14.2% rise in revenue to €10.21 billion and a 64.7% increase in operating profit to €443 million. Traffic was up 0.7% to 83.3 billion RPMs against a 1.2% hike in capacity to 110.49 billion ASMs, dropping load factor 0.4 point to 75.4%. But "buoyant demand for premium products continued," the company said, as average yield advanced 9%.

"Although the dynamic growth of revenues is actually slowing down, the still pleasant trend in average yields and steady bookings give rise to optimism for the remainder of the year," LH said.

Among other Group segments, Cargo's nine-month operating profit declined 71.1% to €13 million owing in part to an $85 million payment to settle cargo collusion lawsuits (ATWOnline, Sept. 12) that it said "imposed a burden on the result." Lufthansa Technik operating profit was up 8.1% to €186 million, LSG Sky Chefs operating profit rose to €46 million from €4 million, Thomas Cook AG narrowed its loss to €34 million from €37 million and LH Systems saw its operating profit fall 18.9% to €30 million.