Because Boeing and Airbus cannot keep up with the delivery of new aircraft, Lufthansa has reactivated some of the double-deckers. You should fly from Munich.
(Photo: dpa)
Frankfurt Lufthansa made a loss in the first quarter of this year. Adjusted operating earnings before interest and taxes (EBIT) amounted to minus 273 million euros. This was announced by Europe’s largest airline group on Wednesday morning. A year earlier, the operating loss had amounted to 577 million euros. Sales reached around seven billion euros, after five billion euros a year ago.
Analysts and industry experts had expected the weak start to the year. The first three months of the year are traditionally the weakest in the aviation industry. After Christmas, people travel less. Since Easter wasn’t until April this year, there was also no turnover in the first major travel season of the year in the first quarter.
Lufthansa suffers from strikes
Earnings were also impacted by high costs for ramping up flight operations and strikes at partner companies such as airports. The quarterly loss that has now been reported should therefore not be overstated. Especially since an important trend is continuing: Ticket revenues remain at a high level.
If you want to fly, you currently have to pay significantly more than before the pandemic. According to Lufthansa, the so-called average yields in the first quarter are 19 percent above the pre-crisis level. On long-haul routes, the figure is even 25 percent higher. This is a result of the scarce supply. Lufthansa has taken numerous flights out of the program in order to ensure the most reliable possible flight operations in the summer despite the staff shortages in the entire industry.
Analysts had expected the good average yields. The strong demand will continue for all airlines in Europe in the summer, wrote Harry Gowers from JP Morgan in a study a few days ago. The desire to travel remains strong, but capacities are still lagging behind what was on offer before the crisis.
The boom in air freight is over
The Lufthansa management is also counting on this development to continue. For the year as a whole, the adjusted operating result should improve significantly compared to 2022. The group will make “significant progress” towards the goal of achieving an adjusted margin of at least eight percent in the coming year. In 2022, the group was at 4.6 percent.
“After a good first quarter, in which we were able to significantly improve our results, we are now expecting a travel boom in the summer and a new record in our traffic revenue for the year as a whole,” said CEO Carsten Spohr in a statement.
For another goal of CEO Spohr, however, the figures now presented are not yet sufficient as evidence: All airlines in the group should be in the black by 2023. In 2022, the core brands Lufthansa and Eurowings, among others, closed with a loss. In the first quarter, the Lufthansa brand remained in the red with an operating result of minus 366 (same period last year: minus 715) million euros, while Eurowings was minus 103 (same period last year: minus 163) million euros.
In contrast, the figures for the first quarter show something different: the boom in air freight is over. The adjusted result of the subsidiary LH Cargo collapsed from 495 to 151 million euros. The margin fell from 42.3 to 18.3 percent – a clear indication that global logistics chains are recovering and freight rates in air traffic are normalizing.
There was no new news in the morning about the planned entry into the Italian ITA. Lufthansa and the Italian Ministry of Finance continue to wrestle with the final details. An agreement is expected shortly.
More: How Lufthansa forgets its customers in the frenzy of growth