Lufthansa 747-8I. Courtesy, Boeing

Lufthansa Group (LH) reported a first-quarter net loss of €397 million ($521.9 million), reduced from a €507 net loss in the year-ago quarter (ATW Daily News, May 6, 2011). The Group also announced it would eliminate 3,500 administrative jobs worldwide over the coming years as part of its cost-cutting measures to improve operating results by €1.5 billion by the end of 2014 (ATW Daily News, Dec. 26, 2011).

LH said in a statement that increased fuel costs, the air traffic tax imposed in Germany and Austria, as well as costs associated with emissions trading in force in Germany since 2012 all had an adverse effect on the operating results.

"Higher taxes, fees and charges put a massive strain on our quarterly result. It was well down on last year despite record revenue,” LH chairman and CEO Christoph Franz said in a statement. “We cannot wait until politicians also recognize the damage that one-sided taxes and charges do to aviation and to Europe's reputation as a place to do business.”

First-quarter revenue was €6.6 billion, up 5.6% year-over-year, mainly due to higher traffic revenue stemming from a higher sales volume and price increases in the passenger business. Cash flow from operating activities rose to €833 million and made it possible to generate a free cash flow of €540 million.

Traffic revenue improved 5.6% to €5.3 billion. Overall, operating income increased 2.5% to €7.2 billion in the reporting period. Operating expenses rose 6.1% in the first quarter to €7.6 billion, mainly due to a 23% increase in fuel costs.

Concerning the job-cut announcement, Franz said, "We can only safeguard jobs for the long term and create new openings if we reorganize the administrative functions and accept job losses now."

For the full year 2012, the Group expects revenue growth to be similar to the previous year. Operating profit is predicted to be in the mid-three figure million euro range.