Category Archives: Lufthansa Group

Lufthansa Group loses 336 million euros in the first quarter

Lufthansa Group issued this statement:

Substantial industry-wide capacity growth in Europe leads to lower unit revenues on short- and medium-haul routes in comparison to the high levels seen in the prior-year period

  • Higher fuel cost of some EUR 200 million negatively impacts results
  • Group confident to increase unit revenues in the second-quarter period in view of favorable booking levels
  • 2019 full-year outlook remains unchanged

On a preliminary basis, Deutsche Lufthansa AG generated total revenues of EUR 7.9 billion in the first three months of 2019, a 3-percent increase on the prior-year period. Adjusted EBIT for the period amounted to EUR -336 million ($380 million US) on a preliminary basis (prior year: EUR 52 million).

Among other factors, first-quarter Adjusted EBIT was reduced by a EUR 202 million rise in fuel costs. Market-wide overcapacities in Europe also put downward pressure on fares. The negative trend was accentuated by the fact that first-quarter results for 2018 had been particularly strong, owing to the capacity reductions deriving from Air Berlin’s demise.

On this basis, the Lufthansa Group’s Network Airlines suffered a 5.2-percent currency-adjusted decline in their unit revenues for the period. The unit revenue decline at Eurowings, with its higher proportion of short- and medium-haul routes, amounted to 8.5 percent. First-quarter unit costs (ex fuel) decreased 0.8% percent at the Network Airlines and 7.2 percent at Eurowings, both on a currency-adjusted basis.

Lufthansa announced when presenting its 2018 annual results that, in view of the overcapacities in Europe, the strong comparable results for the prior-year period and the interim rise in fuel costs, earnings for the first quarter of 2019 were likely to be down from their prior-year level.

On a preliminary basis, the Network Airlines achieved an Adjusted EBIT of EUR -160 million (prior year: EUR 128 million) for the first quarter of 2019, while Eurowings saw its Adjusted EBIT for the period decline to EUR -257 million (prior year: EUR -212 million). First-quarter Adjusted EBIT for Lufthansa Cargo amounted to EUR 24 million (prior year: EUR 72 million), a 67-percent decline that is attributable to downward airfreight market trends, especially on routes between Europe and Asia. Lufthansa Technik reports a first-quarter Adjusted EBIT of EUR 125 million (prior year: EUR 107 million), while LSG achieved an Adjusted EBIT for the period of EUR 2 million (prior year: EUR 1 million). Adjusted EBIT for the Other Businesses amounted to EUR -59 million (prior year: EUR -29 million).

For 2019 as a whole, the Lufthansa Group confirms its expectation of an Adjusted EBIT margin of between 6.5 and 8.0 percent.

“We are seeing good booking levels for the quarter ahead,” says Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.”

Meanwhile Lufthansa is getting ready to take deliver of the first Airbus A321neo.

Photo: Lufthansa.

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Lufthansa Group orders 40 Boeing 787-9 Dreamliners and Airbus A350-900 aircraft, will sell 6 A380s

Lufthansa Group is consistently forging ahead with the modernization of its long-haul fleet. In today’s meeting, based on the recommendation of the Executive Board, the Supervisory Board approved the purchase of a total of 40 state-of-the-art aircraft for the group’s airlines. The 20 Boeing 787-9 Dreamliners (above) and 20 additional Airbus A350-900 planes will primarily be replacing four-engine aircraft. The new planes will be delivered between late 2022 and 2027.

The order has a list-price investment volume of $12 billion USD. As is usual with such orders, Lufthansa Group has negotiated a significant price reduction. The parties have agreed not to disclose the actual purchase price.

“By replacing four-engine planes with new models, we are laying a sustainable foundation for our future in the long run. In addition to the cost-effectiveness of the A350 and B787, the significantly lower CO2 emissions of this new generation of long-haul aircraft was also a decisive factor in our investment decision. Our responsibility for the environment is becoming more and more important as a criterion for our decisions,” says Carsten Spohr, CEO and Chairman of Lufthansa Group.

The decision regarding which airline will deploy the aircraft at which hub will be made at a later date.

The investment in new technology, efficiency and passenger comfort is a continuation of the ongoing fleet modernization of the group’s airlines. The arilines of the Lufthansa Group currently operate a long-haul fleet of 199 aircraft (as of December 2018), including twelve state-of-the-art Airbus A350-900 aircraft. Beginning in 2020, Lufthansa will be introducing the new Boeing 777-9.

Investment in modern, fuel-efficient and low-noise aircraft

With the Airbus A350-900, the Boeing 777-9 and the Boeing 787-9, Lufthansa Group will own the most fuel-efficient long-haul aircraft of their class in terms of kerosene consumption per passenger and 100 kilometers flown. This order highlights the company’s desire to invest in cutting-edge technology in the interest of the environment. On average, the new aircraft will only consume around 2.9 liters of kerosene per passenger and 100 kilometers flown. That is 25% below what is used by predecessor aircraft, which will likewise have a positive impact on the CO2 footprint.

The Boeing 787-9 and Airbus A350-900 aircraft that have been ordered will primarily be replacing four-engine aircraft. By the middle of the next decade, the entire long-haul fleet will have been modernized. The possible fuel savings alone add up to 500,000 metric tons per year. This is equivalent to a CO2 reduction of 1.5 million metric tons.

A consistent focus on cost

With the new, more economical aircraft, the operating cost compared to the earlier models will sink by around 20 percent. In addition to this, Lufthansa Group will be significantly reducing the diversification and complexity of its fleet over the next few years and taking seven aircraft types out of service, which will reduce cost and complexity for maintenance and the supply of replacement parts, among other things.

After the long-haul aircraft rollover, the company will be offering its customers one of the world’s most modern fleets. This will also involve a significant increase in comfort and reliability.

Sale of six Airbus A380 aircraft

In today’s session, the Lufthansa Group Executive Board also informed the Supervisory Board of the sale of six of its 14 Airbus A380 planes to Airbus. The aircraft will be leaving Lufthansa in 2022 and 2023. The parties have agreed not disclose the purchasing price. The transaction will not affect the group’s earnings performance.

Lufthansa continuously monitors the profitability of its world-wide route network. As a consequence, the group is reducing the size of its Airbus A380 fleet from 14 aircraft to eight for economic reasons. The structure of the network and the long-haul fleet, fundamentally optimized according to strategic aspects, will give the company more flexibility and at the same time increase its efficiency and competitiveness. This will of course also benefit Lufthansa’s customers.

Lufthansa Group expands tourist-oriented long-haul portfolio in Frankfurt and Munich with Eurowings

  • First-ever Eurowings presence in Frankfurt as of October 
  • Lufthansa will support marketing and sales for the new long-haul destinations 
  • In Munich, Eurowings will supplement Lufthansa’s long-haul portfolio with daily flights to Bangkok (Thailand) 
  • Harry Hohmeister: “Lufthansa will actively shape the future of tourism together with Eurowings”
  • Thorsten Dirks: “We are combining the strengths of Lufthansa and Eurowings”

Lufthansa Group will be significantly expanding its tourist-oriented long-haul portfolio at its hubs in Frankfurt and Munich. After the successes of Edelweiss in Zürich and the deployment of the first few Eurowings long-haul aircraft departing from Munich, there will now also be flights available from Frankfurt, along with an increase in flights from Munich. For Frankfurt Airport, this means that, as of Fall 2019, Eurowings will be taking off from the metropolis on the Main river.

"BIZ class on board", leased from Brussels on April 29, 2018

As a first step, Eurowings will offer flights from Frankfurt to the popular vacation islands Mauritius and Barbados when the winter flight schedule goes into effect in October 2019. In addition to this, there will also be flights to Windhoek in Namibia, with other destinations currently being planned.

From the Munich hub, Eurowings has already been successfully offering long-haul connections to a selection of tourist destinations since Summer 2018. In the 2019/2020 winter schedule, Eurowings will also be connecting the Bavarian capital with Bangkok (Thailand). Connections from Munich to additional flight destinations are currently being planned.

This step goes hand in hand with a closer cooperation between Lufthansa and Eurowings at Germany’s biggest hub airport: “It is the right strategic step for the Group to combine the strengths of its two largest airlines in Frankfurt: going forward, we will be combining a product tailored to leisure travelers and families and the affordable cost structure of Eurowings with the sales and marketing power of Lufthansa at the Frankfurt location,” says Thorsten Dirks, Member of the Executive Board of Deutsche Lufthansa AG and CEO of Eurowings. “This makes it possible for the group to successfully evolve its portfolio for the growing tourism and leisure travel segment at Germany’s largest airport.”

For this expansion in the tourism segment, Eurowings will be using a total of seven Airbus A330 aircraft (with up to 310 seats), a portion of its fleet that is operated by Sun Express Deutschland. Capacities will be distributed evenly between the two Lufthansa hubs in Frankfurt and Munich.

Top Copyright Photo (all others by the airline): Eurowings (Brussels Airlines) Airbus A330-342 OO-SFB (msn 915) (BIZ class on board) BRU (Ton Jochems). Image: 945850.

Eurowings aircraft slide show:

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Lufthansa Group invests in artificial intelligence partnership with Hopper

The Lufthansa Group and the Lufthansa Innovation Hub have entered into a research alliance with Hopper focused on the subject of artificial intelligence. They have thus finalized their third technology-related investment within a year, following investments in the startups Fleet Logistics and cargo.one.

Founded in Montreal, Canada in 2007, Hopper operates one of the world’s most innovative travel booking apps. By leveraging powerful machine learning and AI, Hopper’s proprietary technology accurately predicts flight and hotel prices and offers its users personalized recommendations at the optimal booking time, as well as alternative travel offers. With this research project – in which the Lufthansa Group is making a multi-million-dollar investment – the two companies are estab¬lishing a long-term collaboration regarding predictive analytics models and flight-demand forecasting. In addition, the project will utilize AI to learn customers’ preferences on a much deeper level in order to provide personalized recommen¬dations about additional services or upgrades.

“Hopper operates one of the world’s most successful flight booking apps and has developed a unique AI-based technology. With this research alliance, the Lufthansa Group is further expanding its expertise in this area. This will enable us to provide our customers with even better data-driven, tailor-made offers in the future. This is one of the central goals of our digital strategy for this year,” explains Christian Langer, Vice President Digital Strategy, Lufthansa Group.

Supported by the partnership with the Lufthansa Group, Hopper continues with the technological development of its services. Following the company’s recent US $100 million financing round, Hopper will also continue to grow its global market presence as part of its international expansion efforts.

“We are thrilled to have Lufthansa Group and Lufthansa Innovation Hub as part-ners in research as we further our expansion into Europe,” said Frederic Lalonde, CEO of Hopper. “The combination of local market knowledge and dedication to exploring the upper bounds of AI makes this an ideal partnership for Hopper as we double down on our efforts to bring the best in travel booking to a global audience.”

The Lufthansa Innovation Hub facilitates Hopper’s European Rollout

The strategic partnership with the Lufthansa Group was initiated and negotiated by the Lufthansa Innovation Hub, the Group’s innovation and digitization unit. In addition to furthering the development of AI, Hopper will work closely with the Lufthansa Innovation Hub to expand into the European market. The Innovation Hub will provide strategic input on market-specific customer needs as well as access to its network of stakeholders in the European travel and technology space.

“We are delighted to have established a meaningful partnership between the Lufthansa Group and one of the world’s most innovative travel tech startups,” explains Gleb Tritus, Managing Director of the Lufthansa Innovation Hub. “In the coming months, we will support the collaboration with the Lufthansa Group’s revenue management and distribution experts. We are also confident that our Berlin team will be able to make a vital contribution to Hopper’s European expansion.”

Hopper’s European rollout is scheduled to start in mid-2019.

Photo: Lufthansa Group.

Lufthansa Group becomes the largest airline group in Europe with 142 million passengers in 2018

Lufthansa Group has made this announcement for its traffic figures for 2018:

In 2018, the airlines of the Lufthansa Group carried a total of 142 million passengers, setting a new passenger record. With more than 1.2 million flights and a seat load factor of 81.4 percent, the aircraft load factor was higher than ever before.

The growth drivers for the network airlines were the Zurich hub and the Munich and Vienna hubs, with passenger growth of 9.5 percent, 9.3 percent and 8.5 percent respectively. The number of passengers at the Frankfurt hub grew by 4.7 percent in 2018. Eurowings also contributed to the Lufthansa Group’s new passenger record in 2018 with growth of 18 percent.

In December, the freight capacity was 4.7 per cent higher than in the previous year and the tonne-kilometres sold 0.4 per cent higher. This results in a payload factor of 66.1 percent, which is 2.8 percentage points lower. In 2018, total freight capacity was 4.3 percent higher than in the previous year. At the same time, sales increased by 0.8 percent in this period. At 66.4 percent, the load factor was 2.3 percentage points lower than in the previous year.

In December 2018, the airlines of the Lufthansa Group welcomed around 10 million passengers on board their aircraft. This corresponds to an increase of 6.9 percent over the same month last year. The number of seat kilometers offered was 11 percent up on the previous year, while sales increased by 10.6 percent. This results in a seat load factor of 78.5 percent, 0.3 percentage points lower than in December 2017.

Network Airlines

The network airlines Lufthansa, Swiss and Austrian Airlines carried a total of some 7.3 million passengers in December, 5.8 percent more than in the same month last year. The number of seat-kilometers offered in December was 9.2 percent up on the same month last year. Sales in seat-kilometers rose by 9.1 percent in the same period. The seat load factor fell by 0.1 percentage points to 78.7 percent.

In total, the network airlines carried around 104 million passengers last year, 7.4 percent more than in the same period last year. The seat load factor for network airlines rose by 0.4 percentage points to 81.5 percent during this period.

Eurowings Group

In point-to-point traffic, the Lufthansa Group carried 2.6 million passengers with the airlines Eurowings (including Germanwings) and Brussels Airlines in December, of which around 2.3 million on short-haul flights and 294,000 on long-haul flights.

This represents an increase of 9.9 percent over the previous year. The 19.5 percent increase in the number of flights on offer in December was offset by a 17.5 per cent increase in sales. At 78 percent, the seat load factor was 1.4 percentage points lower than in the same month last year.

On short-haul routes, the number of seat-kilometers offered was increased by 18 percent in December, while the number of seat-kilometers sold rose by 13.9 percent over the same period. At 74.3 percent, the seat load factor was 2.6 percentage points lower than in the same month last year. On long-haul routes, the seat load factor rose by 0.3 percentage points to 83.1 percent over the same period. The 21.6 percent increase in capacity was offset by a 22.1 percent increase in sales.

In 2018, the Eurowings Group carried a total of around 38.5 million passengers, 18 percent more than in the previous year. At 81.3 percent, the seat load factor during this period was 1.4 percentage points higher than in the previous year.

Lufthansa Group is looking to hire more than 5000 new employees in 2019

Lufthansa Group has made this announcement for 2019:

Approximately 5500 new employees will be cleared for takeoff with a career in Lufthansa Group this year – in Germany, Austria, Switzerland and Belgium alone, the home markets of the aviation group. The company is looking to hire over 1300 flight attendants – primarily at the Munich hub and at SWISS in Zürich. For the core Lufthansa brand, around 1200 new hires are planned at the Frankfurt and Munich hubs, in all business areas. Lufthansa Group is also hiring a large number of additional employees worldwide.

In addition, up to 500 future pilots are to begin their training as flight students with Lufthansa Aviation Training at the European Flight Academy in 2019. In order to stabilize flight operations after a turbulent summer, Lufthansa Group is investing approximately a quarter of a billion euros. For instance, around 600 employees are being hired to ensure quality in operations.

Highly professional environment and attractive employment conditions

There are over 500 job profiles in the globally operating aviation group that has over 550 subsidiaries and affiliates. Potential applicants can find available positions in the career portal Be-Lufthansa (www.be-lufthansa.com). Over 170,000 applications were submitted through this platform in 2018. “This shows once again how popular Lufthansa is as an employer with its various business areas,” says Bettina Volkens, Chief Officer Corporate Human Resources and Legal Affairs at Deutsche Lufthansa AG. As an international employer with employees hailing from 147 different countries, Lufthansa Group emphasizes diversity – and not just in terms of language and origin. “Equal opportunities for men and women at every level, that is what I stand for and that is what I stand up for,” Volkens says. “We offer a highly professional environment, attractive employment conditions and are standard-setting in professional training. Moving forward, we plan to bring even more young employees into the company than before as well as promote our talents through a wide range of programs.”

Wanted: technological know-how and IT skills

Lufthansa Technik Group is set to grow significantly this year: “Die Technik” is looking for over 1200 new colleagues in Germany, including several hundred operational employees, 400 direct entries and more than 200 apprentices. Lufthansa Group is also looking to hire well over 600 IT specialists in Germany. Lufthansa Systems already positioned itself successfully as an employer within the IT environment last year with the campaign “Aviation Heroes wanted”. And the same is true this year: IT is key, be that at Lufthansa Systems or at for example Industry Solutions (350 projected new hires) or Lufthansa Airlines (150). There is also a group-wide program that will employ 15 IT trainees.

Over 300 apprentices in Germany

Over 300 new positions for junior employees are planned in Germany for this year and almost 80 will start their vocational training at SWISS and Austrian Airlines in Switzerland and Austria. On top of this, around 60 trainees will be off to a flying start in Lufthansa Group this year. The group currently offers ten cooperative degree programs as well as vocational training in 29 different skilled occupations and several trainee programs.

Lufthansa Group at a glance: passenger transportation is the biggest business segment of Lufthansa Group and is carried out by the airlines Lufthansa, Swiss, Austrian Airlines, Eurowings and Brussels Airlines as well as SunExpress. The other business areas, including logistics, engineering and catering and additional group companies are leaders in their respective fields.

As of September 30, 2018, Lufthansa Group had approximately 135,000 employees. Around 32,000 of them work at Lufthansa. With 40,000 employees, Lufthansa Group is the largest employer in Frankfurt and Hessen; the group has more than 70,000 employees in Germany.

Lufthansa reduces planned growth for 2019

Lufthansa Airbus A321-231 D-AISP (msn 3864) FRA (Marcelo F. De Biasi). Image: 944223.

Lufthansa Group issued this report:

Lufthansa Group achieved an Adjusted EBIT of EUR 2.4 billion for the first nine months of 2018 – a 7.7 percent decline on the prior-year period which is primarily attributable to the integration costs at Eurowings. Adjusted EBIT margin for the period amounted to 8.8 percent. Nine-month results were also burdened by a EUR 536 million rise in fuel costs, an increase in the costs incurred in connection with flight delays and cancellations, and higher maintenance expenses.

“We expect to see our full-year costs increase by more than EUR 1 billion in 2018 due to fuel costs and the extra expenses incurred from delays and cancellations alone,” says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. “But despite this, we achieved an Adjusted EBIT of EUR 2.4 billion for the first three quarters of this year, the second-best nine-month result in our history. And had it not been for the losses at Eurowings, we would have posted another record earnings result. This is a clear testament to our sustainable financial strength – a strength that we have demonstrated even under challenging conditions this year.”

Lufthansa Group generated total revenues of EUR 26.9 billion in the first nine months of 2018. Total revenues increased by 6 percent on the prior-year period, while traffic revenues were up 7 percent. As a result of the first-time adoption of the new IFRS 15 accounting standard, the reported growth of total revenues to EUR 26.9 billion was only 0.5 percent, while the reported traffic revenues declined by 1 percent to EUR 21.1 billion.

Unit costs for the period remained stable excluding fuel and currency effects, despite the extraordinary expense. Unit revenues excluding currency effects increased 0.3 percent. The airlines of Lufthansa Group transported some 108.5 million passengers in the first three quarters of 2018, a new record volume. Nine-month seat load factor was also at a record high of 82 percent. The exceptionally strong capacity growth for the period, which was driven by the insolvency of Air Berlin, will be substantially lower in 2019.

“Future growth in the air transport sector will need to pay far more regard to the capacities of the infrastructure in the air and on the ground,” Carsten Spohr observes. “At the same time, we aim to secure the profitability of our airlines through capacity discipline. We also expect the substantial rises in fuel costs to lead to higher ticket prices from 2019 at the latest.”

According to current market expectations, airlines in Germany are likely to expand their capacities by over 10 percent for the 2018/19 winter timetable period, a development that is still being driven by the demise of Air Berlin. The airlines of Lufthansa Group, however, will raise their capacity by a more modest 8 percent, and will further reduce their capacity growth to 3.8 percent for the 2019 summer timetable period.

Balance sheet further strengthened

Free cash flow for the period declined 59 percent to EUR 1.2 billion. The reduction is largely attributable to a 57-percent increase in net investments, which rose to EUR 2.6 billion. Most of this spending – EUR 2.2 billion – was on aircraft and reserve engines. Pension provisions for the period declined 6.2 percent to EUR 4.8 billion, owing partly to the increase in the discount rate from 2.0 to 2.1 percent. Net financial debt declined 14 percent from its 2017 year-end level to EUR 2.5 billion. The debt ratio (adjusted net debt in relation to Adjusted EBITDA) was reduced accordingly, declining 0.2 points to 1.5.

Network Airlines

The Network Airlines – Lufthansa, Swiss and Austrian Airlines – further improved on their record earnings of 2017, raising their aggregate nine-month Adjusted EBIT by another EUR 13 million to just under EUR 2 billion. The driver behind this development was Swiss, which achieved an outstanding nine-month Adjusted EBIT of EUR 525 million, 18.8 percent above its prior-year level. Swiss remains the Group’s most profitable airline, with an Adjusted EBIT margin of 14.3 percent. Lufthansa’s nine-month Adjusted EBIT of EUR 1.3 billion was 4.2 per cent down on the prior-year period, while Austrian Airlines’ EUR 92 million represents a 14-per-cent decline.

Eurowings 

Eurowings reports an Adjusted EBIT of EUR -65 million for the first nine months of 2018. The EUR 210 million decline on the prior-year period is attributable in particular to a non-recurring expense of EUR 170 million for completing the integration of parts of the former Air Berlin, and to additional costs incurred as a result of flight delays and cancellations.

“In 2017 we seized a historic opportunity in the consolidation of Europe’s aviation sector,” comments Carsten Spohr. “And it was the right decision to do so in strategic terms, even if this has given Eurowings a very challenging 2018. We view the one-off costs of integrating these operations and of our rapid expansion as a long-term investment that will help sustainably strengthen our market position.”

Aviation Services

Buoyed by strong demand and continuing high yields at Lufthansa Cargo, the Group’s Logistics business segment raised its nine-month Adjusted EBIT 56.1 percent to EUR 153 million. The LSG Group also posted a much-improved Adjusted EBIT for the period of EUR 99 million, a 50-percent increase that was especially achieved through lower transformation costs. Nine-month Adjusted EBIT at Lufthansa Technik declined 3.3 percent to EUR 322 million, owing mainly to rises in the costs of spares and greater use of external maintenance capacities.

Outlook

Lufthansa confirms its full-year earnings projection for 2018. With originally-planned capacity for the winter timetable period now slightly reduced, total annual capacity is expected to be around 8 percent above 2017. The Group still expects to post a slight increase in unit revenues for the year as a whole. The reduction in unit costs excluding fuel and currency effects is expected to be around 1 percent, despite the negative impact of integration costs at Eurowings. Fuel costs are projected to be around EUR 850 million higher than in 2017.

The Group expects to report a slightly lower annual Adjusted EBIT for its Aviation Services segment. This is related to a more negative result at Other Businesses & Group Functions, owing to an absence of the currency gains reported here in 2017. All in all, Lufthansa Group continues to predict an Adjusted EBIT for 2018 that is slightly below the record level seen last year.

“We have achieved solid earnings for the first nine months of this year, and are still on course for our second-best-ever annual EBIT result,” confirms Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “So our earnings projections for 2018 as a whole remain unchanged at slightly below previous year.”

On a like-for-like basis, excluding volume growth, Lufthansa Group expects its fuel costs to rise by a further EUR 900 million in 2019.

Top Copyright Photo: Lufthansa Airbus A321-231 D-AISP (msn 3864) FRA (Marcelo F. De Biasi). Image: 944223.

Lufthansa aircraft slide show:

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