Category Archives: Lufthansa Cargo

Airberlin sells Niki and LGW to Lufthansa

Niki-The Spirit of Niki (flyniki.com) Airbus A320-214 OE-LEX (msn 2867) ZRH (Rolf Wallner). Image: 922611.

Airberlin issued this statement on October 12, 2017:

Air Berlin PLC and Air Berlin PLC & Co. Luftverkehrs KG have reached an understanding with Deutsche Lufthansa AG on October 12, 2017 that entities of the Deutsche Lufthansa group will acquire certain business units from entities of the Air Berlin group, including in particular NIKI Luftfahrt GmbH as well as Luftfahrtgesellschaft Walter mbH (LGW). The combined purchase price of approximately EUR 210 million will be subject to adjustments upon closing of the transaction.

The transaction is, amongst others, subject to regulatory approvals.

The negotiations with easyJet Airline Company Limited and other bidders, in each case in respect of different units of the Air Berlin group, are still continuing.

Lufthansa issued this statement:

After intense negotiations over the past few weeks, Deutsche Lufthansa AG and the Air Berlin Group have signed a contract on October 13, 2017 regarding the purchase of NIKI Luftfahrt GmbH (NIKI) and Luftfahrtgesellschaft Walter mbH (LGW).

These two carriers are projected to increase the capacity of the operational fleet at Eurowings as follows:

LGW with 870 employees, as well as 17 Bombardier Dash 8 Q400 and 13 Airbus A320 aircraft
NIKI with 830 employees, as well as 20 Airbus A320 type aircraft

This means that the wet-lease operation that is currently still provided for Eurowings by Air Berlin Group will be taken over by Eurowings’ own operational fleet. Eurowings also plans to acquire additional aircraft on the market and hire 1,300 more employees.

Eurowings remains the fastest-growing airline in Europe

“Our strategic modernization initiatives have paid off. We have regained the capacity to invest and grow, in order to play an active role in the consolidation of the European airline market with Eurowings. As the fastest-growing airline in Europe, Eurowings can now expand the range of services it offers customers,” says Carsten Spohr, Chairman of the Board of Directors at Deutsche Lufthansa AG.

Eurowings expands its market position in Germany and Europe

The fleet marketed by Eurowings (program fleet) is projected to grow from 160 to 210 aircraft with the finalization of the transaction and purchase of additional aircraft, with 189 short- and medium-haul aircraft and 21 long-haul aircraft, making Eurowings the third-largest in European point-to-point traffic. The number of flight operations will grow to a total of eight, including the aircraft operated by TUIfly and Sun Express on a wet-lease basis. With its platform concept, Eurowings is oriented towards the integration of flight operations and is predestined to actively advance the consolidation of the European aviation market.

At the same time, the number of employees is expected to grow from currently around 7,000 to roughly 10,000. Eurowings has approximately 50 new short-haul and medium-haul connections planned for the summer of 2018 and – not related to the transaction with Air Berlin – additional long-haul connections in North Rhine-Westphalia, Berlin and Munich. The airline will be growing particularly strongly at these locations. Eurowings is anticipating a total of 80,000 additional flights and 12 million additional passengers per year. This would increase the point-to-point traffic sales volume of the Lufthansa Group by up to 40 percent. Eurowings is expanding its competitive position in the German and European market with this. It will be able to produce at competitive costs with the acquired capacity and generate positive profit contributions as soon as the integration is complete.

The finalization of the transaction is subject to approval by the relevant committees and the competition authorities. Lufthansa expects the transaction to be finalized by the end of the year.

Top Copyright Photo: Niki-The Spirit of Niki (flyniki.com) Airbus A320-214 OE-LEX (msn 2867) ZRH (Rolf Wallner). Image: 922611.

Bottom Copyright Photo: Airberlin (airberlin.com) (LGW) Bombardier DHC-8-402 (Q400) D-ABQI (msn 4264) ZRH (Andi Hiltl). Image: 907142.

Airberlin (airberlin.com) (LGW) Bombardier DHC-8-402 (Q400) D-ABQI (msn 4264) ZRH (Andi Hiltl). Image: 907142.

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Lufthansa Group improves its financial results for the first half of 2015

Lufthansa Group (Lufthansa) (Frankfurt) today issued this financial report for the first half of 2015. The group produced a profit of €954 million ($1.0 billion) for the first six months of 2015, compared to a loss of €79 million ($86.3 million) in the same period a year ago. Here is the group’s report:

Lufthansa Group logo

The Lufthansa Group reports solid business development for the first half of 2015 and improved results in all of its operating segments. The Adjusted EBIT (Earnings Before Interest and Tax) rose by EUR 290 million year-on-year to EUR 468 million. For the six months ended June 30, sales increased by 8.5 percent to EUR 15.4 billion, with traffic revenue accounting for EUR 12.1 billion of that figure.

Yields for the Lufthansa Group’s passenger airlines rose by 2.4 percent in the first half of 2015, which was mainly exchange rate related. Had it not been for the tailwind from a weaker euro, however, yields would have been appreciably lower, in line with expectations.

In the second quarter alone, yields declined by 5.7 percent after adjusting for exchange rate effects. Although unit costs as a whole also rose mainly as a result of currency exchange rates, the EUR 309 million reduction in fuel costs coupled with improved sales and capacity utilization more than compensated for the reduction in prices. All currency effects in the first six months net to a total negative impact of EUR 158 million. The net effect is negative as Lufthansa Group has higher costs in foreign currencies, among others due to fuel spending in US Dollar, compared to the revenue side in foreign currencies.

The Group’s net result for the first six months of the year rose to EUR 954 million, compared with a net loss of EUR 79 million for the same period in the prior year. In addition to a higher operating result, this is mainly due to the increase in the financial result. More than half of the Group’s net result was attributable to an accounting effect resulting from the appreciation in equity capital of EUR 503 million following the redemption of the jetBlue convertible bond in the first quarter. In the second quarter, assessments of interest and exchange rate hedging instruments as well as fuel hedging options had a positive impact, increasing the result by a total of EUR 176 million.

Simone Menne, Chairman of the Financial and Aviation services of Deutsche Lufthansa AG said:

“Our first-half results are solid. Aside from the positive development of our business operating areas and, in particular, our passenger airlines, which gained extra momentum in the second quarter, the fall in fuel costs is largely responsible for the improvement in our results. We will, however, not be misled by that, since we assume that the price level for airline tickets will not recover. We will therefore continue to work consistently on the competitive focus of the Lufthansa Group.”

Swiss new logo

In the second quarter, the Lufthansa Group achieved an Adjusted EBIT margin of 7.6 percent. Lufthansa Passenger Airlines and, in particular, Swiss played a crucial role in this positive development. The Passenger Airline Group recorded a margin of almost 8 percent in the second quarter, with Swiss, with a margin of over 11 percent, posting an exceptionally good result – also in comparison to others in the sector.

 

 

Germanwings (2nd) (13) logo

Germanwings also remains on a successful course, and will close the current year in profit for the first time.

Simone Menne:

“Our strategic focus is right. On the one hand, our premium brands – Lufthansa and Swiss – are very successful, and at the same time Germanwings and Eurowings are also showing good business developments as secondary brands. We are focusing on the premium quality of our hub airlines and the high level of competitiveness of our secondary brands in point-to-point traffic. This approach makes us profitable and fit for the future within the airline market”.

In the first half year, Lufthansa Passenger Airlines improved its result by EUR 181 million, Swiss by EUR 90 million, based on an Adjusted EBIT of EUR 178 million.

Austrian (2015) logo

 

While Austrian Airlines reported a loss of EUR 17 million in the first half-year, it managed to increase the Adjusted EBIT by a solid EUR 27m compared with the previous year.

Lufthansa Cargo logo

 

However, in the second quarter, Lufthansa Cargo was unable to maintain its good performance of the first quarter. With the introduction of the summer timetable, Lufthansa Cargo’s competitors significantly increased their freight capacity in many markets, thereby placing prices under increasing pressure. Eventually, the logistics segment achieved an improvement of EUR 7 million in the Adjusted EBIT to EUR 50 million in the first half-year.

The other business segments also managed to improve their half-year results:

Lufthansa Technik by EUR 41 million to EUR 268 million and LSG SkyChefs by EUR 17 million to EUR 26 million.

The equity ratio rose again to 17.5 percent at the end of the second quarter due to the higher actuarial interest rate and the resultant decrease in pension provisions. The ratio was therewith higher than for the full-year 2014. Although pension liabilities declined as a result of the 2.9 percent increase in the actuarial interest rate, at EUR 6.6bn overall pension liabilities still remain at a very high level.

Simone Menne: “With regard to pension liabilities and equity, it can also be said that developments throughout the second quarter have been positive, even if they were strongly driven by external factors. The need for sustainable structures in our pension scheme and transitional pension arrangements remains unchanged, nevertheless. The ambitious investment program to which we are committed to in the coming years is part of our strategy to ensure our sustainability. In order to generate the necessary funds we need the right conditions in all the business areas and companies within the Lufthansa Group.”

In the first half, operating cash-flow rose by almost 45 percent to EUR 2.5bn. At the end of the first half-year, a free cash flow of just over EUR 1bn was reported – almost double that of the previous year. Against this background, net indebtedness decreased substantially by 31 percent compared to the full-year 2014.

As planned, capital expenditure rose year-on-year. Amongst other things, the delivery of two further Airbus A380s and four Boeing 747-8s as well as the modernization of First and Business Class on the long-haul fleet and the installation of the new Premium Economy Class were contributory factors. Gross expenditure in 2015 will total EUR 2.9 billion. For the following years, a decline in the level of investment to EUR 2.5 billion is planned.

Lufthansa confirms its outlook for the full-year 2015 with an Adjusted EBIT of more than EUR 1.5 million before strike costs.

Copyright Photo: Rolf Wallner/AirlinersGallery.com. Lufthansa is approaching the retirement of its remaining Boeing 737 fleet (Boeing 737-300s and 737-500s). The Classic 737 is likely to be retired by the end of the year depending on schedule demand although this remains fluid. Boeing 737-330 D-ABXL (msn 23531) taxies at Zurich.

Lufthansa aircraft slide show: AG Airline Slide Show

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Lufthansa Cargo to bring home the remains of the victims of Germanwings flight 4U9525

Lufthansa Group (Frankfurt) tomorrow (June 9) will operate a special Lufthansa Cargo (Frankfurt) McDonnell Douglas MD-11F flight from Marseille to Dusseldorf which will bring home the remains of the victims of Germanwings (Cologne/Bonn) ill-fate flight 4U9525 which crashed in the French Alps. Transfer of the remains to the victim’s families will occur on June 10. Lufthansa Cargo will operate more flights in the coming weeks until the end of June. The group issued this statement:

Lufthansa Group logo

Lufthansa is working with all its available resources to ensure the repatriation and transfer of victims of the Germanwings flight 4U9525 to the relatives in the originally planned schedule. To start off the repatriation flights, Lufthansa will arrange at short notice a special flight with a MD-11 of Lufthansa Cargo from Marseille to Dusseldorf. The plane will take off from Marseille on June 9 at 20:50 and is expected at Dusseldorf at 22:30. There will be 30 coffins of the victims of flight 4U9525 on board.

The repatriation of the victims was initially scheduled for next week. At short notice, however, a delay had resulted due to regulatory requirements. The Federal Government Commissioner for the victims’ relatives had then turned immediately to the authorities and received assurances that preparations for repatriation could be made immediately.

After this first special flight to Dusseldorf, the other victims will be gradually transferred to their home countries in the coming weeks. The French authorities are working hard in order to create the formal conditions for the transfer of the victims as soon as possible. Lufthansa is in close contact with the relatives to ensure that the transfer of the victims is carried out according to the relatives’ wishes.

Germanwings black logo

Copyright Photo: Pascal Simon/AirlinersGallery.com. McDonnell Douglas MD-11F D-ALCM (msn 48805) departs from the Frankfurt cargo hub.

Lufthansa Cargo aircraft slide show: AG Airline Slide Show

Lufthansa Group reports a first quarter profit of €425 million ($474 million)

The Lufthansa Group (Frankfurt) reported a net profit of €425 million ($474 million) for the first quarter. Here is the full report:

Lufthansa Group logo

The Lufthansa Group has reported a positive course of business for the first quarter of 2015. At total revenue of nearly 8 per cent higher, the EBIT and adjusted EBIT both rose by EUR 73m. Both key performance indicators were thus 30 per cent higher than in the previous year. The Group closed the first quarter with an adjusted EBIT of EUR -167 m (previous year: EUR -240 m).

Simone Menne, Chief Officer Finance and Aviation Services of Deutsche Lufthansa AG, says: “All operating business segments were able to increase their results in the first quarter. Above all, Swiss International Air Lines (Zurich) and Lufthansa Cargo (Frankfurt) have done better than in the previous year. But Lufthansa German Airlines has also shown a positive development, although it was worse hit by strikes and other one-off effects than in the previous year.”

The Group result rose significantly more strongly than the adjusted EBIT in the reporting period. With a plus of EUR 677 m in comparison with the same quarter in the previous year, the Lufthansa Group achieved a consolidated result of EUR 425 m. An extraordinary effect from the premature exchange of JetBlue swaps made a significant contribution to this development. This transaction alone improved the financial result without an effect on equity by EUR 503m.

The result was once again overshadowed by the consequences of the strike called by the trade union Cockpit among the pilots of Lufthansa German Airlines, Lufthansa Cargo and Germanwings on a total of six days between January and March 2015. Flight cancellations caused by strikes led to a burden on the result of EUR 42m. Due to weaker advance bookings in the following quarters as a consequence of the strike, Lufthansa expects a further burden on the result of EUR 58m.

Cash flows, which are important in view of high total investments, developed positively in the reporting period. Cash flow from operating activities rose to EUR 1,394m (previous year: EUR 855m), the free cash flow improved to EUR 532m (previous year: EUR 195m).

The actuarial interest rate for valuing pension obligations declined further in the first three months of the year, in Germany from 2.6 per cent to 1.7 per cent now. Thus the arithmetic pension burden rose by EUR 3.4bn. This was contrasted with a growth in pension assets of around EUR 500m. The equity ratio fell by 5.7 percentage points to 7.5 per cent now.

“This development shows once again how volatile the key figure ‘equity ratio’ has become since the introduction of the new IFRS accounting standards. We are not alone in this situation. However, other groups have already made the necessary structural change from a cover oriented to a contributions oriented pension commitment. Here, more urgently than ever, we need sustainably financeable solutions in place of obsolete structures. We can only achieve this together with our collective bargaining partners,” says Simone Menne.

Operating costs and income showed strong fluctuations in comparison with the same quarter in the previous year. What was decisive here was the significantly lower oil price, the continuing weakness of the euro and low interest rates. Fuel costs were EUR 209m lower than in the same quarter in the previous year, while expenses on fees went up by nearly 7 per cent, despite the lower number of flights and passengers. The weak euro and the rise in pension expenses also led to an increase in staff costs of nearly 7 per cent.

Simone Menne summarised the interim report for the first three months of the year: “We see positive developments in the result and in cash flow. This shows we are on the right course. At the same time, we continue to see great pressure to act. The enormous pension burdens are putting considerable pressure on our equity. And we cannot accept the continuing increase in fees or the development of our unit costs. Great efforts remain to be made here in order to strengthen the international competitiveness of all the business segments of the Lufthansa Group.”

Copyright Photo: Rolf Wallner/AirlinersGallery.com. Swiss and Lufthansa Cargo did better than in the same quarter than the previous year. The aging Swiss Airbus A340-300s will be replaced with the new Boeing 777-300 ERs on order. A340-313 HB-JMK (msn 169) taxies at the Zurich hub.

Swiss aircraft slide show: AG Airline Slide Show

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Lufthansa Cargo to operate all flights despite a strike by the pilots

Lufhansa Group (Frankfurt) has issued this statement concerning a strike against subsidiary Lufthansa Cargo (Frankfurt):

Good news for customers of Lufthansa Cargo: the airline plans to operate all of its flights despite the walkout announced by the pilots’ union, Vereinigung Cockpit. The strike was set to ground all cargo flights scheduled to depart from Frankfurt on Wednesday (October 8) and Thursday (October 9).

Two flights will be departing earlier than scheduled, allowing them to bypass the strike period. As Lufthansa Cargo usually flies about half of its freight in the bellies of Lufthansa and Austrian Airlines passenger aircraft, the effects for customers will be kept at an absolute minimum.

Lufthansa has shown willingness to compromise in its discussions with Vereinigung Cockpit and offered new negotiations on the disputed issues. The airline therefore has little understanding for this renewed call to a strike and also considers it entirely out of proportion – especially as the minimum age for early retirement at Lufthansa Cargo is already 60 years.

Copyright Photo: James Helbock/AirlinersGallery.com. Boeing 777-FBT D-ALFA (msn 41674) arrives at Los Angeles.

Lufthansa Cargo: AG Slide Show

ANA and Lufthansa Cargo obtain antitrust immunity for their Japan-Europe joint cargo venture

ANA-All Nippon Airways (Tokyo) and Lufthansa Cargo AG (Frankfurt) will launch a strategic air cargo joint venture on routes between Japan and Europe and vice versa. This is the first worldwide cargo joint venture of its kind. ANA has received antitrust immunity, i. e. approval for the joint venture from the Japanese Ministry of Land Infrastructure and Transport after filing for it in the spring of 2014. In addition, the joint venture has been positively assessed by external counsel for compliance with relevant EU antitrust regulations.

Now ANA and Lufthansa Cargo can jointly manage activities covered by the joint venture including network planning, pricing, sales and handling on all routes between Japan and Europe and vice versa. Based on a joint contract which shall be signed in the next weeks, the two carriers aim to introduce the joint approach on shipments originating from Japan to Europe in winter 2014/2015 and for shipments from Europe to Japan mid-2015.

The joint venture will benefit customers by generating a greater selection of routings and a wider range of service options. Customers will especially profit from a larger and faster network with more direct flights, more destinations and more frequencies. By their moving under one roof at major stations, such as the airports Tokyo Narita and Nagoya in Japan and Dusseldorf and Frankfurt in Germany, customers will enjoy the services of both airlines at a single location.

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. ANA Cargo’s Boeing 767-381F ER JA602F (msn 33509) arrives at bthe Tokyo (Narita) base.

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Lufthansa Cargo: AG Slide Show

Bottom Copyright Photo: Rob Skinkis/AirlinersGallery.com. Boeing 777-FBT D-ALFC (msn 41676) of Lufthansa Cargo lands at Manchester.

 

Lufthansa Group resumes flights to Erbil, otherwise will avoid Iraqi airspace

Lufthansa Group (Frankfurt) has issued this statement about flying over Iraq:

After renewed consultation with the relevant national security authorities, the Lufthansa Group has decided to resume flights to Erbil in northern Iraq (Kurdistan) from today (August 4). Erbil lies well outside the direct crisis zone in Iraq, and flights to and from the city will be routed to avoid overflying the zone. Lufthansa (Frankfurt) flies twice-weekly to Erbil, a further daily flight is operated by Austrian Airlines (Vienna).

For the time being, however, transit traffic to Asia and the Middle East, for example, will continue to detour Iraqi airspace. The Lufthansa Group is in close and regular contact with the relevant national security authorities, also in Iraq. Based on our own assessment, there is currently no danger in overflying Iraq. Nevertheless, the Lufthansa Group has decided to avoid the Iraqi airspace above the section controlled by Isis for the time being. In taking this step, the Lufthansa Group is taking into account the growing apprehension of customers and our own flight crews. The safety and well being of passengers is naturally our paramount priority. The changes in flight routes apply to all airlines in the Lufthansa Group. Aside from Lufthansa, those airlines include Lufthansa Cargo, Austrian Airlines and Swiss. The new flight routes will not significantly lengthen flight times.

Copyright Photo: TMK Photography/AirlinersGallery.com. Boeing 747-430 D-ABVS (msn 28286) of Lufthansa with the short-lived “Fanhansa” titles for the recent FIFA World Cup departs from Toronto (Pearson).

Lufthansa: AG Slide Show

Austrian: AG Slide Show