Lufthansa Group recorded a 2018 net profit of €2.2 billion ($2.5 billion), down 7.6% from €2.3 billion in 2017.

Revenues grew 6% to €35.8 billion ($41 billion) in 2018; its adjusted operating profit declined by 4% to €2.8 billion. The company incurred €850 million in higher fuel costs and around €500 million in extra expenses because of cancellations and delays.

Startup costs for the integration of former airberlin assets into Eurowings amounted to around €170 million, a large contributor to that unit’s operating loss of €230 million.

In light of capacity constraints and pressure on unit revenues, Lufthansa decided to substantially reduce its growth for the upcoming summer. The airline plans to increase capacity by 1.9%, which is half of the previous target of 3.8%. It is targeting an adjusted operating margin of 6.5%-8%. It reached 7.9% in 2018 and 8.3% in 2017.

Lufthansa CEO Carsten Spohr said the company would have “ordered less aircraft” from Airbus if the manufacturer had not agreed to take back six Airbus A380s.

The airline placed an order March 13 for 20 Boeing 787-9s and 20 more Airbus A350-900s to accelerate the renewal of its widebody fleet. As part of the process it decided to reduce the number of A380s drastically from the current 14 to just eight in 2023. Spohr indicated that Airbus was prepared to pay Lufthansa’s book value for the aircraft as anticipated for 2022 and 2023, therefore the airline does not incur any financial penalties or gain benefits from the decision. “Ordering the A380 was the right decision at the time,” Spohr said. “Back then it was the most economical and fuel-efficient aircraft.” But that is now no longer the case.

Two more A380s will be transferred from Frankfurt to Munich in the summer of 2020; seven of the aircraft will then be operated at both hubs. Spohr said the decision about where the remaining eight aircraft will be based from 2023 onwards will not be made until a year prior.

The reduction of the A380 fleet and the replacement of the 747-400 by the 777-9 shows “that we are moving away from flying big aircraft at big hubs to flying smaller aircraft in smaller hubs,” Spohr said. The decision was also a result of infrastructure constraints in Frankfurt. “If we didn’t have these problems, we would have made a different fleet decision.”

Lufthansa Group plans to phase out seven sub-fleets through 2027: The A340-300 and -600, the A330-200, the 747-400, the 777-200ER and 767-300ER and the MD-11F. The A340-300s are currently still in service at Lufthansa, Swiss and Brussels Airlines, the -600 and 747-400 at Lufthansa. The 777-200ER and 767-300ER are operated by Austrian and the MD-11F by Lufthansa Cargo.

Separately, Spohr confirmed that Lufthansa is looking at buying leisure carrier Condor which Thomas Cook plans to sell along with its airline division. But he cautioned that any action would depend on pricing and regulatory constraints.

The group is evaluating whether it should sell its catering division LSG SkyChefs, but no decision has been made.

Jens Flottau, jens.flottau@aviationweek.com