Category Archives: Lufthansa Group

Lufthansa Group expects strong travel season – Operating loss cut by more than two-thirds in 2021

Carsten Spohr, CEO of Deutsche Lufthansa AG:

“2021, was a challenging year for the Lufthansa Group and its employees. And 2022 also begins with developments that worry us as citizens of this continent. Our Airlines connect people, cultures and economies. We stand for international understanding and peace in Europe and around the world. Our thoughts are with the people of Ukraine and with our colleagues on the ground, to whom we are providing every possible support.

The Lufthansa Group used the past financial year to further renew itself. We have decisively and consistently advanced and implemented the transformation and restructuring of the company. Today, the Lufthansa Group is more efficient and more sustainable than before the pandemic.

Even in the financially most difficult two years in our history, in which painful cuts were unavoidable, we acted in a socially responsible manner and sustainably secured 105,000 jobs in the Lufthansa Group.

We are very certain that air traffic will experience a strong upswing this year. Our strategy of expanding the private travel segment has proved successful and is paying off. People want to travel. They seek and need personal contact – especially after two years of pandemic and the associated social restrictions. The pent up demand for leisure and business travel was already significantly noticeable in 2021 – and this trend is set to intensify in 2022.

The Coronavirus crisis has taken its toll on all of us. The pandemic presented our customers, shareholders and our employees with extreme challenges. We are now leaving the crisis behind us, mentally and – in view of the strong booking figures this year – also commercially and face the next challenge strengthened.”

Result 2021

The Lufthansa Group generated revenue of 16.8 billion euros in the fiscal year 2021, around 24 percent more than in the previous year (previous year: 13.6 billion euros).

An increase in passengers, the transformation and restructuring of the company, and the associated cost reductions contributed to a significant improvement in earnings. The company returned to profit in the third quarter due to strong summer travel months. For the full year, the operating loss was significantly reduced, despite the third and fourth pandemic wave and the resulting travel restrictions. Adjusted EBIT in 2021 was -2.3 billion euros (previous year: -5.5 billion euros). Excluding restructuring costs of 581 million euros, Adjusted EBIT was -1.8 billion euros. The Adjusted EBIT margin improved accordingly to -14.0 percent (previous year:   -40.1 percent).

Compared with the pre-crisis level, the structural decrease in personnel expenses, excluding one-off restructuring expenses, effects from short-time working and temporary measures, amounted to 10 percent. With the implementation of additional planned measures, the decrease will be 15 to 20 percent. At the end of last year, the Lufthansa Group employed around 105,000 employees, more than 30,000 fewer than before the start of the Coronavirus pandemic.

The Group net income improved by 67 percent to -2.2 billion euros (previous year: -6.7 billion euros).

Lufthansa Cargo posts record result, Lufthansa Technik and LSG generate profit

The positive earnings trend in the logistics segment continued in the financial year 2021. High demand for freight capacities combined with a limited offer due to a global lack of freight capacity on passenger aircraft and disruptions to supply chains, especially in shipping, ensured that average yields continued to rise. Lufthansa Cargo benefited from this and almost doubled its Adjusted EBIT year-on-year to 1.5 billion euros (previous year: 772 million euros). This is the best result of its history.

By contrast, Network Airlines’ earnings were still heavily impacted by the Corona pandemic in the fiscal year 2021. Adjusted EBIT remained clearly negative at
-3.5 billion euros but improved by 25 percent year-on-year (previous year:
-4.7 billion euros).

Eurowings benefited in particular from the return of demand in the private travel segment, especially last summer. Cost reductions as part of the restructuring program also contributed to the improvement in earnings. Adjusted EBIT increased by 67 percent to -230 million euros (previous year: -703 million euros).

Lufthansa Technik posted a clearly positive result last year. The provider of aircraft maintenance, repair and overhaul services benefited from the recovery in air traffic. Lufthansa Technik achieved an Adjusted EBIT of 210 million euros (previous year: -383 million euros).

The LSG catering division also returned to profitability, posting an Adjusted EBIT of 27 million euros (previous year: -284 million euros), mainly thanks to the recovery of air traffic in North America.

Passenger numbers and traffic development

During the past year, significantly more passengers flew with the Lufthansa Group airlines than in 2020. In total, 47 million passengers were welcomed on board. That was an increase of 29 percent compared to the previous year. The number of flights in 2021 increased by almost 18 percent compared to 2020. As a result of the significant increase in demand, a total of 32 percent more seat kilometers were offered last year than in the previous year.

Alongside the dynamic growth in demand for air travel, the number of offered flights was significantly expanded over the course of the year. While at the beginning of 2021 the offered capacity still only amounted to 21 percent (compared to 2019), by the end of the year the airlines had reached an offered capacity of 60 percent.

In line with expectations, average offered capacity amounted to 40 percent of 2019 capacity for the year.

Free cash flow excluding special effects only slightly negative, liquidity above target value

The Lufthansa Group continued to place a particular focus on consistent cash management in 2021. At 1.3 billion euros, gross capital expenditure remained considerably below pre-pandemic levels. Through strict management of receivables and payables and the significant increase in new bookings, the Group achieved a significant improvement in Adjusted Free Cash Flow to -855 million euros (prior year: -3.7 billion euros). Excluding the payment of taxes amounting to 810 million euros that had been deferred in the previous year, Adjusted Free Cash Flow was close to breakeven at -45 million euros.

In the past year, the Lufthansa Group significantly improved its balance sheet through numerous transactions on the financial market. A successful capital increase, the issue of six bonds and the conclusion of 20 aircraft financings clearly document the confidence of the financial markets in the company. The repayable funds raised as part of the WSF stabilization measures were repaid in full earlier than expected.

As of December 31, 2021, the Lufthansa Group’s available liquidity of 9.4 billion euros was above the long-term target corridor of 6 to 8 billion euros.

Other balance sheet ratios also improved notably in the financial year. Pension liabilities decreased to around 6.7 billion euros, mainly due to an increase in the interest rate used to discount pension obligations (previous year: 9.5 billion euros). As a result of the capital increase, net debt decreased to 9.0 billion euros (previous year: 9.9 billion euros). Equity tripled to 4.5 billion euros (previous year: 1.4 billion euros).

Remco Steenbergen, CFO of Deutsche Lufthansa AG:

“We used the past year to significantly strengthen our balance sheet. Our financing measures on the equity and debt side show that we again have a very good and broad market access. Our liquidity is more than twice as high compared to the pre-crisis level. This, combined with our structural cost savings, gives us a very good financial basis to further expand our strong market position.”

Transformation and restructuring lead to significant cost reductions

The successful continuation of the company’s ambitious transformation and restructuring program led to a further significant reduction in costs in the Group. In the meantime measures have been implemented which will reduce costs by around 2.7 billion euros per year. Thereby more than 75 percent of the annual cost savings of 3.5 billion euros targeted by 2024 have already been secured. This has been achieved primarily by reducing personnel costs, increasing productivity, improving processes at the passenger airlines, Lufthansa Cargo and the Group functions, and the modernization of the fleet. The company continues to examine the sale of subsidiaries that are not part of the core business of the Group. AirPlus and the remaining part of LSG’s catering business after the sale of the European part, are to be sold as soon as market conditions permit. A partial sale or a partial IPO are still being pursued for Lufthansa Technik. The closing of the transaction is intended for 2023.

Outlook

The Lufthansa Group expects a significant increase in demand for air travel in the current year. In February, our customers have booked more flight tickets than at any time since the beginning of the pandemic. The number of bookings for the Easter and summer holiday periods has almost reached the level of 2019. To some destinations, the number of bookings has even tripled (compared to 2019). For the Easter vacations, Lufthansa alone will therefore offer more than 50 additional flights to meet all booking requests. Overall, in this year the Lufthansa Group airlines offer a greater variety of tourist destinations than ever before, with more than 120 classic vacation destinations. Demand is particularly strong for destinations in the USA and the Mediterranean.

In line with the growing demand, flight schedules are further expanded. For the summer, the company expects capacity to increase to around 85 percent compared to 2019. On short- and medium-haul routes, the figure is expected to be around 95 percent. Eurowings will even offer more capacity in the summer than in 2019. For the year as a whole, the Lufthansa Group expects an average capacity of more than 70 percent compared to 2019.

The entire airline industry will be confronted with increasing external costs in 2022. Air traffic control and airport charges are significantly increasing. Additional burdens also result from the rising oil price. However, the Group expects to be significantly less affected by this cost inflation than its competitors. It has for example started to hedge at an early stage against rising fuel prices and the increase in the cost of emissions certificates.

Major uncertainties regarding the dramatic developments in Ukraine and the economic and geopolitical consequences of the conflict, as well as remaining uncertainties regarding the course of the pandemic, do not allow to provide a detailed financial outlook at present.

In 2022 however, the company expects further year-on-year improvements in Adjusted EBIT and Adjusted free cash flow. After a challenging first quarter, which is still impacted by the spread of the Omicron variant, the Lufthansa Group expects a significant improvement in operating results in the following quarters.

Building on the progress we forecast for 2022, the Lufthansa Group confirms its communicated targets for 2024 (Adjusted EBIT margin of at least 8% and Adjusted ROCE of at least 10%).

Remco Steenbergen, CFO of Deutsche Lufthansa AG:

“Our ambition is clear – we want to return to positive results as quickly as possible. We have laid the foundations for this, above all by implementing our cost reduction program. The strong recovery in demand in recent weeks also gives us cause for optimism. We cannot yet foresee how the significant increase in geopolitical uncertainties will affect demand and the economic environment. Nevertheless, we will be able to continue and accelerate our economic recovery in 2022.”

Connect the world – protect its future

The Lufthansa Group has set itself ambitious climate protection goals and aims to halve its net CO₂ emissions by 2030 compared to 2019 and to achieve a neutral CO₂ balance by 2050. The company is focusing in particular on accelerated fleet modernization. Last year, the Lufthansa Group took delivery of eleven new aircraft. In 2022, the company expects to take delivery of 29 more fuel-efficient, quiet and efficient aircraft, including four Airbus A350-900s and five Boeing 787-9 long-haul aircraft. The use of sustainable aviation fuels and innovative new offers for customers to make their air travel CO₂-neutral will further reduce CO₂ emissions.

The company’s clear goal is to continue to play a pioneering role in aviation for more and better climate protection in the future. The Lufthansa Group bundles its numerous sustainability initiatives and partnerships in the “CleanTech Hub”, where impulses from science, industry and the global start-up scene are combined with the company’s extensive airline know-how. Experts are currently collaborating on more than 80 projects – which include the production of sustainable aviation fuels using sunlight, the use of artificial intelligence for flight route optimization in real time, the development and the implementation of a fuel-saving surface technology for passenger aircraft that imitates the properties of the particularly streamlined shark skin.

Investments in new premium customer offerings

The clear goal in 2022 is to once again consistently offer the premium service that passengers rightly expect from the Lufthansa Group. Several measures are underway in order to achieve this. For example, the digital offerings and self-service options will be consistently expanded and the processes at the airports optimized for our customers. Onboard service will not only be restored to the usual premium standard as soon as the pandemic-related hygiene protection measures permit but will also be improved further. The company is also investing in renewing and expanding the infrastructure, for example in the lounges.

Further information

Further information on the results of individual business units will be published in the Annual Report. It will be published at the same time as this press release on March 3, 2022, at 7:00 a.m. CET at http://www.lufthansagroup.com/investor-relations.

The annual press conference will be streamed live on http://www.lufthansagroup.com from 10:00 a.m. CET. The analyst call will be streamed live on https://investor-relations.lufthansagroup.com/en/publications/financial-reports.html from 13:00 CET.

Lufthansa Group     January – December October – December
2021  2020  Δ   2021 2020  Δ 
Total revenue EUR million 16,811 13,589 +24% 5,833 2,594 +125%
of which traffic revenue EUR million 11,876 9,078 +31% 4,326 1,674 +158%
EBIT EUR million -2,316 -7,353 +69% -193 -1,496 +87%
Adjusted EBIT1  EUR million -2,349 -5,451 +57% -271 -1,290 +79%
Network Airlines EUR million -3,486 -4,674 +25% -586 -1,024 +43%
Eurowings EUR million -230 -703 +67% -86 -237 +64%
Logistics EUR million 1,493 772 +93% 552 326 +69%
MRO EUR million 210 -383 nmf. 47 -175 nmf.
Catering EUR million 27 -284 nmf. -25 -15 -67%
Others EUR million -437 -314 -39% -232 -237 +2%
Adjusted EBIT
excl. restructuring cost
EUR million -1,768 -5,218 +66% -145 -1,190 +88%
Net profit/loss EUR million -2,191 -6,725 +67% -314 -1,141 +73%
Earnings per share EUR -2.99 -12.51 +76% -0.45 -2.12 +79%
               
Total Assets EUR million 42,538 39,484 +8%      
Operating cash flow EUR million 618 -2,328   158 -730  
Gross Investments EUR million 1,329 1,273 +4% 362 250 +45%
Adjusted Free  Cashflow  EUR million -855 -3,669 +77% -261 -1,090 +76%
               
Net Debt EUR million 9,023 9,922 -9%      
 
Adjusted EBIT-Margin in % -14.0 -40.1 +26.1pts. -4.6 -49.7 +45.1pts
               
Employees as of December 31   105,290 110,065 -4%      

1 Adjusted EBIT is not a measure under IFRS. Information on the calculation of the Adjusted EBIT is available in the Annual Report 2020 of Deutsche Lufthansa AG.

 

Lufthansa Group to suspend flights to Kyiv and Odessa

Lufthansa on Monday will suspend its flights to both Kyiv and Odessa in Ukraine until the end of February due to a pending Russian invasion.

Service to Lviv in western Ukraine will continue.

Lufthansa stated it is “constantly monitoring the situation and will decide on further flights at a later date.”

Austrian Airlines has also cancelled flights to both cities until the end of the month.

Swiss is also suspending service to Kyiv starting on Monday.

Flights scheduled departures from Boryspil International Airport in Kyiv for Monday:

Flight Time Destination Airline Terminal Gate Status
PQ 7123 00:05 Sharm El Sheikh Sky Up Airlines D D14 Scheduled
PQ 7131 00:15 Sharm El Sheikh Sky Up Airlines D D15 Scheduled
PC 1723 01:55 Ankara Pegasus Airlines D D4 Scheduled
PS 9407 04:35 Riga Ukraine International Airlines D Scheduled
BT 407 04:35 Riga Air Baltic D Scheduled
7B 331 07:05 Tbilisi Bees Airline D Scheduled
FR 3085 08:45 Vilnius Ryanair D Scheduled
FR 6897 09:05 Katowice Ryanair D Scheduled
FR 3277 09:05 Riga Ryanair D Scheduled
ET 4235 09:10 Istanbul Ethiopian Airlines Corporation D Scheduled
MS 9505 09:10 Istanbul Egypt Air D Scheduled
TK 8811 09:10 Istanbul Turkish Airlines D Scheduled
PS 711 09:10 Istanbul Ukraine International Airlines D Scheduled
PQ 441 09:30 Tbilisi Sky Up Airlines D Scheduled
TP 8242 09:40 Munich TAP Portugal D Scheduled
PS 415 09:40 Munich Ukraine International Airlines D Scheduled
AF 3375 09:45 Paris Air France D Scheduled
PS 775 09:45 Tel Aviv Ukraine International Airlines D Scheduled
PS 127 09:45 Paris Ukraine International Airlines D Scheduled
KL 3139 09:50 Odesa KLM D Scheduled
PS 55 09:50 Odesa Ukraine International Airlines D Scheduled
TK 458 09:50 Istanbul Turkish Airlines D Scheduled
TP 8228 09:50 London TAP Portugal D Scheduled
PS 111 09:50 London Ukraine International Airlines D Scheduled
TP 8238 09:50 Prague TAP Portugal D Scheduled
PS 9558 09:50 Istanbul Ukraine International Airlines D Scheduled
PS 807 09:50 Prague Ukraine International Airlines D Scheduled
OK 4917 09:50 Prague CSA Czech Airlines D Scheduled
7W 121 09:50 Odesa Wind Rose D Scheduled
PS 177 09:55 Vilnius Ukraine International Airlines D Scheduled
BT 7401 09:55 Vilnius Air Baltic D Scheduled
PS 101 10:00 Amsterdam Ukraine International Airlines D Scheduled
PS 9061 10:00 Lviv Ukraine International Airlines D Scheduled
KL 3097 10:00 Amsterdam KLM D Scheduled
TP 8240 10:00 Amsterdam TAP Portugal D Scheduled
7W 161 10:00 Lviv Wind Rose D Scheduled
7W 101 10:10 Dnipro Wind Rose D Scheduled
PQ 491 10:10 Istanbul Sky Up Airlines D Scheduled
PS 9001 10:10 Dnipro Ukraine International Airlines D Scheduled
PS 9041 10:15 Kharkiv Ukraine International Airlines D Scheduled
7W 141 10:15 Kharkiv Wind Rose D Scheduled
PQ 821 10:15 Beauvais Sky Up Airlines D Scheduled
PQ 741 10:20 Barcelona Sky Up Airlines D Scheduled
PQ 761 10:40 Madrid Sky Up Airlines D Scheduled
PS 311 10:40 Milan Ukraine International Airlines D Scheduled
TP 8218 10:40 Milan TAP Portugal D Scheduled
FR 976 10:55 Vienna Ryanair D Scheduled
LH 2547 11:25 Munich Lufthansa D Cancelled
J2 9684 11:30 Baku Buta Airways D Scheduled
FR 3199 11:30 Berlin Ryanair D Scheduled
FR 6421 12:10 Madrid Ryanair D Scheduled
RK 3678 12:40 London Ryanair Uk D Scheduled
7W 727 12:45 Belgrade Wind Rose D Scheduled
FR 9193 13:10 Paphos Ryanair D Scheduled
G9 262 13:25 Sharjah Air Arabia D Scheduled
LO 752 13:55 Warsaw LOT Polish Airlines D Scheduled
RK 9228 14:10 Manchester Ryanair Uk D Scheduled
TK 7869 14:25 Ankara Turkish Airlines D Scheduled
FZ 1728 14:25 Dubai Flydubai D Scheduled
FR 2112 14:30 Cologne Ryanair D Scheduled
7B 511 14:45 Alicante Bees Airline D Scheduled
TK 1256 15:05 Istanbul Turkish Airlines D Scheduled
PS 9556 15:05 Istanbul Ukraine International Airlines D Scheduled
FR 3167 15:10 Warsaw Ryanair D Scheduled
7W 113 15:15 Ivano-Frankivsk Wind Rose D Scheduled
PS 9013 15:15 Ivano-Frankivsk Ukraine International Airlines D Scheduled
PS 9719 15:25 Prague Ukraine International Airlines D Scheduled
OK 919 15:25 Prague CSA Czech Airlines D Scheduled
7W 103 15:25 Dnipro Wind Rose D Scheduled
PS 9413 15:30 Riga Ukraine International Airlines D Scheduled
BT 403 15:30 Riga Air Baltic D Scheduled
FR 3138 16:10 Wroclaw Ryanair D Scheduled
PQ 701 16:10 Lisbon Sky Up Airlines D Scheduled
QR 296 16:40 Doha Qatar Airways Company D Scheduled
FR 7849 17:20 Bergamo Ryanair D Scheduled
FR 7853 17:50 Rome Ryanair D Scheduled
FZ 1730 18:25 Dubai Flydubai D Scheduled
LO 754 18:55 Warsaw LOT Polish Airlines D Scheduled
PS 897 19:40 Chisinau Ukraine International Airlines D Scheduled
PS 777 20:00 Tel Aviv Ukraine International Airlines D Scheduled
PS 9085 20:10 Zaporizhzhia Ukraine International Airlines D Scheduled
PS 611 20:10 Yerevan Ukraine International Airlines D Scheduled
7W 125 20:10 Odesa Wind Rose D Scheduled
7W 185 20:10 Zaporizhzhia Wind Rose D Scheduled
TP 6751 20:10 Odesa TAP Portugal D Scheduled
FR 2741 20:10 Karlsruhe/Baden Baden Ryanair D Scheduled
PS 53 20:10 Odesa Ukraine International Airlines D Scheduled
FR 3832 20:15 Venice Ryanair D Scheduled
FR 3832 20:15 Treviso Ryanair D Scheduled
PS 9005 20:20 Dnipro Ukraine International Airlines D Scheduled
7W 105 20:20 Dnipro Wind Rose D Scheduled
7W 145 20:25 Kharkiv Wind Rose D Scheduled
FR 3069 20:25 Barcelona Ryanair D Scheduled
PS 9045 20:25 Kharkiv Ukraine International Airlines D Scheduled
PS 9065 20:30 Lviv Ukraine International Airlines D Scheduled
7W 165 20:30 Lviv Wind Rose D Scheduled
PS 9556 20:40 Istanbul Ukraine International Airlines D Scheduled
TK 460 20:40 Istanbul Turkish Airlines D Scheduled
FR 3826 20:55 Naples Ryanair D Scheduled
FR 3077 21:15 Bratislava Ryanair D Scheduled
PS 9102 21:40 Almaty Ukraine International Airlines D Scheduled
KC 202 21:40 Almaty Air Astana D Scheduled
FR 3175 21:45 Gdansk Ryanair D Scheduled
FR 7263 22:50 Krakow Ryanair D Scheduled
FR 6918 23:20 Warsaw Ryanair D Scheduled

Italy green lights the sale of ITA Airways but will retain a small share

Airline Color Scheme - Introduced 2021

The government of Italy has signaled to the Lufthansa Group and MSC shipping group of Switzerland it can proceed with negotiations to acquire a majority share of newly-created ITA Airways.

The government however wants to retain a small share.

The government has also drafted a decree which lists ways it can offload its majority share of ITA Airways, including a direct sale or a public offer, without setting a deadline for a final deal.

ITA Airways on January 24, 2022 announced it had received an Expression of Interest from the MSC Group and Lufthansa to acquire the majority of ITA Airways. The MSC Group has agreed with Lufthansa its participation in the partnership on terms to be defined during the Due Diligence.

Both the MSC Group and Lufthansa have expressed the wish that the Italian Government maintains a minority stake in the Company. Furthermore, the MSC Group and Lufthansa have requested 90 days of exclusivity to work on this Expression of Interest.

Top Copyright Photo: ITA Airways Airbus A320-216 EI-DTN (msn 4143) CDG (Manuel Negrerie). Image: 956718.

ITA Airways aircraft slide show:

ITA Airways photo gallery:

 

Demand for sustainable aviation fuel is on the rise

Lufthansa Group made this announcement:

CO2-neutral flying is already possible today. The Lufthansa Group is pursuing an ambitious path for more climate friendly aviation and, since spring 2021, in addition to private travelers, has also been offering companies the option of using Sustainable Aviation Fuel (SAF) for their flights. Steadily more of the Lufthansa Group’s corporate customers are interested in this climate friendly form of business travel or freight transportation. After the insurance company AXA Deutschland, the logistics service providers DB Schenker and Kuehne+Nagel, Kearney has now also become the first internationally active management consultancy to invest extensively in SAF. As a result, Kearney is now using the Lufthansa Group’s “Compensaid Corporate Program” to make the majority of its business flights CO2-neutral.

“As Europe’s largest purchaser of Sustainable Aviation Fuel, we already enable CO2-neutral flying. Among our corporate customers, we are seeing increasing interest in using this genuine alternative to fossil aviation fuel. Every company that already invests in Sustainable Aviation Fuel spurs the market ramp-up and thus makes an important contribution on the way to CO2-neutral air transport,” says Christina Foerster, Member of the Lufthansa Group’s Executive Board responsible for Customer, IT & Corporate Responsibility.

Lufthansa Group continues to invest in Sustainable Aviation Fuel

A few days ago, the Lufthansa Group secured sustainable kerosene for a quarter of a billion US-Dollars in order to be able to meet the foreseeable increase in demand in the coming years. This is the largest pure sustainability investment in the history of the Lufthansa Group to date.

Sustainable Aviation Fuel is currently produced mainly from biogenic residues, for example from used cooking oils. This means that the new aviation fuel can, in perspective, enable nearly CO2-neutral aviation. The Lufthansa Group has been involved in SAF research for many years and has built up an extensive network of partnerships. The company is already the largest buyer of SAF in Europe, a pilot customer of the first industrially produced Power-to-Liquid fuel worldwide, and also aims to be among the world’s leading airline groups in the use of sustainable kerosene.

Currently, very little SAF is available on the global market and it is significantly more expensive than conventional kerosene. The Lufthansa Group is therefore working on various projects to advance the development and availability of SAF including, in particular, SAF produced from renewable electrical energy. In addition to the use of more efficient, latest-generation aircraft, SAF are the most effective lever on the path to a CO2-neutral aviation industry.

Lufthansa Group joins SBTi initiative

The Lufthansa Group has set ambitious climate protection goals and aims to halve net CO₂ emissions by 2030 compared to 2019 and to achieve a neutral CO₂ balance by 2050. To further specify these net targets, it has joined the so-called Science Based Target Initiative (SBTi) to bring its CO2 reduction path in line with the United Nations Paris Climate Agreement. Based on scientific calculations, CO2 emissions will be continuously reduced with the help of fleet renewal and optimization, improved operational efficiency and the use of SAF. The official validation will take place in 2022.

Lufthansa Group airlines offers 440 additional flights for Christmas and New Year’s Day

The airlines of the Lufthansa Group (Lufthansa, Swiss, Austrian Airlines, Brussels Airlines and Eurowings) are offering around 80,000 additional seats on 440 extra flights for the upcoming holiday season and New Year. The airlines are now responding to the weeks-long increase in demand for flights during the Holiday vacations by resuming destinations and increasing the frequency of existing connections or deploying larger aircraft.

From its hubs in Munich and Frankfurt alone, Lufthansa is offering more than 120 additional flights with a capacity of 25,000 seats during the Christmas period.

In the U.S., New York and destinations in the state of Florida are booked particularly often. In Europe, destinations on the Spanish mainland and the Canary Islands, Portugal and other sunny destinations in the Mediterranean region as well as Scandinavia are in particularly high demand. In addition to these destinations, the snow-sure ski resorts in Lapland (northern Finland) are back on the flight schedule. Thus one reaches over the holiday season and New Year from Frankfurt Ivalo and Kuusamo as well as from Munich Kittilä in Lappland and Tromsö in Norway – Northern Light inclusive.

All flights are immediately bookable. With planning air travelers should consider in each case the appropriate current entry and quarantine regulations.

Flying CO2 neutral today

Travelers can make a personal contribution to climate protection and make their air travel CO2 neutral. In addition to the option of offsetting the flight via high-quality climate projects, Lufthansa guests can already fly with sustainable fuel today. The airlines of the Lufthansa Group have integrated the options into the booking process. Frequent flyers can find them in the Miles & More app.

Lufthansa Group repays financial aid from the German government

Deutsche Lufthansa AG repaid or cancelled all remaining government Stabilization funds from the Federal Republic of Germany on Friday, November 12. The repayment was made much earlier than originally planned. This was made possible primarily by the rising demand for air travel, the fast restructuring and transformation of the Lufthansa Group and the capital markets’ confidence in the company.

This means that, the Silent Participation II of the Economic Stabilization Fund of the Federal Republic of Germany (ESF) amounting to 1 billion euros was repaid in full. After the company had already repaid Silent Participation I in October, of which only 1.5 billion euros were drawn, the unused and remaining part has now been terminated too. Last February, the company had already repaid a KfW loan of 1 billion euros earlier than expected. This means that all German loans and Silent Participations, including interest, have now been repaid respectively terminated. Under this condition, ESF has undertaken to sell its stake in Deutsche Lufthansa AG amounting to approx. 14 percent of the share capital by October 2023 at the latest.

In June 2020, the shareholders of Deutsche Lufthansa AG cleared the way for the Stabilization measures of the Economic Stabilization Fund (ESF) of the Federal Republic of Germany. The German government’s package originally provided measures and loans totaling up to 9 billion euros, of which the company has drawn down a total of around 3.8 billion euros. This includes around 306 million euros with which the ESF built up its shareholding in Deutsche Lufthansa AG.

To refinance existing liabilities and the government Stabilization packages, the company has taken various debt and equity financing measures since autumn 2020. In doing so, it benefited from the steadily growing confidence of the financial markets in the future prospects of the Lufthansa Group.

In November 2020, the company made a “comeback” on the capital markets with a convertible bond with a total volume of 600 million euros and a corporate bond of 1 billion euros. In February 2021, Deutsche Lufthansa AG again successfully issued a bond for 1.6 billion euros. Another bond placement followed in July 2021 in the amount of 1 billion euros. In October 2021, the company successfully completed a capital increase. The gross proceeds from the capital increase amounted to 2.2 billion euros. Finally, on 9 November 2021, the Lufthansa Group was again successfully active on the financial market and issued a bond in the amount of 1.5 billion euros.

Lufthansa Group and Travelport sign a new distribution agreement

The Lufthansa Group airlines, one of the worlds’ leading airline groups and industry pioneer in the area of New Distribution Capability (NDC), and Travelport, worldwide leader in travel retail, today announced a new distribution agreement that enables modern airline retailing as well as technology innovation. Under the agreement, which covers the carriers Lufthansa, SWISS, Austrian Airlines, Brussels Airlines and Air Dolomiti, Travelport will distribute Lufthansa Group airlines’ NDC content through the next-generation content distribution and travel retailing platform, Travelport+. This agreement builds on the ongoing distribution of Lufthansa Group airlines’ content through traditional EDIFACT channels.

Both companies are already in the process of implementing the end-to-end NDC functionality. The launch, expected in the first half of 2022, also lays the foundation for a diversified NDC program giving Travelport-connected travel agencies the ability to access Lufthansa Group airlines’ content through Travelport+ by signing up to one of the two available commercial NDC models, the NDC Public model or NDC Bilateral model.

Lufthansa Group generates positive cash inflows again in the second quarter

Lufthansa Group issued this financial statement for the second quarter:

In the second quarter, the Lufthansa Group benefited from a significant market recovery with increasing passenger and booking numbers. Relaxation of travel restrictions in international air traffic and a great pent-up demand among passengers drove both demand and activity. In June alone, the number of bookings was more than twice as high as at the beginning of the quarter. As planned, the capacity offered at the end of June was 40 percent of the pre-crisis level.

Carsten Spohr, CEO of Deutsche Lufthansa AG, says:

“All Lufthansa employees worldwide have made great efforts to significantly lower costs in all areas. As a result, we have been able to stop the outflow of funds in the current phase of reviving our business and generate a positive cash flow for the first time since the beginning of the pandemic. The fact that more than 30,000 colleagues have left us in the process so far hurts us all, but is unavoidable to sustainably save the more than 100,000 remaining jobs. This unique crisis is also a unique opportunity for us to accelerate the transformation of Lufthansa in order to consolidate our global leadership role.”

Quarterly loss limited – return to positive free cash flow

Thanks to the positive development of the airlines, record results at Lufthansa Cargo and the continued recovery of Lufthansa Technik and the LSG Group, operating losses in the second quarter of 2021 declined significantly by 43 percent to -952 million euros compared to the first quarter of 2021.

Adjusted free cash flow in the second quarter was positive at 340 million euros, mainly due to strong bookings. Operating cash flow was positive at 784 million euros due to positive working capital effects related to strong bookings in the second quarter. Excluding these effects, the cash drain averaged 200 million euros per month.

Reduce costs and volunteer programs

The Group is making faster progress than previously planned towards its goal of reducing more than 3.5 billion euros in costs by 2024. Measures have already been implemented for more than half of the cost reductions. Originally, this level should only be achieved by the end of 2021. The voluntary programs offered in Germany and the planned job cuts at SWISS contribute to the sustainable cost reduction. The Group expects around 1,500 ground staff and just under 400 cockpit employees in Germany alone to take advantage of the current offers to leave the company. In Switzerland, 2,000 full-time jobs will be cut by the end of the year, including some 500 forced dismissals.

At the end of the first half year, the number of employees was 108,000. This means that around 30,000 employees have left the Group since the start of the crisis. Including the above-mentioned programs, over 1.1 billion euros of the targeted personnel savings of 1.8 billion euros have therefore already been realized or contractually agreed.

Sales and earnings performance

Group sales in the second quarter amounted to 3.2 billion euros, 70 percent higher than in the second quarter of the prior year (prior year: 1.9 billion euros). The operating loss based on Adjusted EBIT decreased to -952 million euros (prior year: -1.7 billion euros). Net income in the second quarter was -756 million euros (prior year: -1.5 billion euros).

Group sales in the first half of the financial year amounted to 5.8 billion euros (previous year: 8.3 billion euros). At -2.1 billion euros, the operating loss on the basis of Adjusted EBIT was lower in the first half of the year than in the previous year (previous year: -2.9 billion euros). Net income for the first half of the year was -1.8 billion euros (previous year: – 3.6 billion euros).

Traffic development in the second quarter

The capacity offered, measured in passenger kilometers, was 29 percent of the pre-crisis level of 2019 in the second quarter of 2021. In total, the airlines of the Lufthansa Group carried 7 million passengers in the past three months. This corresponded to 18 percent of the pre-crisis level compared to the second quarter of 2019. The seat load factor was 51 percent, 32 percentage points lower than in the second quarter of 2019. The development improved steadily over the course of the quarter. In June, offered capacity was already at 34 percent compared to the same month in 2019, and around 40 percent at the end of the month. The load factor was 58% in June, positively influenced by the pick-up in demand on short- and medium-haul routes in Europe. The number of destinations served is currently at 84% of the pre-crisis level. By September, nearly all destinations will be offered again.

Group airlines benefit from rising demand

The Group’s airlines reduced their losses thanks to recovering demand and successful restructuring efforts. Adjusted EBIT at the Network Airlines was -1.2 billion euros (prior year: -1.5 billion euros) in the second quarter. In the first half of the year, the Network Airlines recorded an Adjusted EBIT of -2.5 billion euros (prior year: -2.4 billion euros). Eurowings reduced its operating loss on an Adjusted EBIT basis to -108 million euros in the second quarter (prior year: -183 million euros) and to -252 million euros in the first half year (prior year: -358 million euros).

Lufthansa Cargo continues on record course

In the freight business, Lufthansa Cargo continues to benefit from the scarce cargo capacity in the bellies of passenger aircraft and the continued high demand for air freight. Adjusted EBIT in the logistics segment rose to 326 million euros in the second quarter (previous year: 299 million euros). For the first half of the year, Lufthansa Cargo recorded an Adjusted EBIT of 640 million euros (previous year: 277 million euros), the highest ever result in this period in the history of Lufthansa Cargo. Continued structural capacity constraints in the global freight business are expected to support the revenue and earnings development of Lufthansa Cargo in the coming years as well.

Lufthansa Technik continued its earnings recovery and improved its Adjusted EBIT in Q2 to positive 86 million euros (previous year: -126 million euros). For the first half of the year, Lufthansa Technik reported an Adjusted EBIT of 102 million euros (previous year: – 122 million euros) and benefits mainly from the increasing demand of non-European airlines, whose home markets are recovering faster than the European market.

Liquidity and equity development

At the end of the second quarter, the Lufthansa Group had available liquidity of 11.1 billion euros. This includes unused funds from the government’s stabilization measures and loans of around 3.9 billion euros. The proceeds of a bond issue in July amounting to 1 billion euros have not yet been taken into account.

At 8.9 billion euros, net debt was 1.0 billion euros lower than at the end of 2020 (December 31, 2020: 9.9 billion euros). This is mainly due to the drawing of part of the Silent Participation I of the Economic Stabilization Fund, which is accounted for as equity. Excluding the drawing, net debt at 10.4 billion euros was around 500 million euros higher at the end of 2020. In addition, supported by positive valuation effects on pension liabilities of 1.9 billion euros, the equity ratio increased by 4.2 percentage points to 7.7 percent compared to the end of 2020 (December 31, 2020: 3.5 percent).

Remco Steenbergen, CFO of Deutsche Lufthansa AG, says:

“In our financial management, our focus remains on strengthening our balance sheet. The second quarter was another step in the right direction. However, there is no way around making the Lufthansa Group profitable again as quickly as possible and implementing further cost reductions.”

In addition to the restructuring measures, the repayment of state aid and asset divestitures are important components of the strategy for strengthening the balance sheet of the Lufthansa Group. As the recently issued bonds have once again demonstrated the good access the Group has to various forms of financing on the capital markets, preparations for a capital increase are continuing.

Outlook

The development of the Lufthansa Group for the full year 2021 remains dependent on the pandemic situation, which has a significant direct impact on business development. Here, travel restrictions in particular have a decisive influence on customer demand.

The desire for travel is unbroken among people. Lufthansa therefore expects a positive development in demand for European tourism and an increasing recovery in business travel in the second half of the year. The Group’s airlines have further expanded their range of long-haul flights to include tourist destinations. The company expects an increasing opening of the markets in the second half of the year. Air travel to North America should be possible again from late summer and gradually towards Asia towards the end of the year.

Based on this expectation, the Lufthansa Group continues to assume that the Group airlines’ capacity, measured in seat kilometers offered, will be around 40 percent of the pre-crisis level in 2019 in 2021. A further increase in capacity to around 50% of the pre-crisis level and an increase in passenger numbers is expected for the third quarter. The Group thus expects to be able to stop the operating cash outflow in the third quarter and to generate positive EBITDA.

In 2021 as a whole, the Lufthansa Group continues to expect an increase in Group sales and a reduction in operating loss as measured by Adjusted EBIT.

Lufthansa Group   January – June April – June
2021 2020 Δ 2021 2020 Δ
Total revenue EUR million 5,771 8,335 -31% 3,211 1,894 +70%
of which traffic revenue EUR million 3,637 5,641 -36% 2,095 1,102 +90%
EBIT EUR million -2,114 ‐3,468 +39% -979 ‐1,846 +47%
Adjusted EBIT1 EUR million -2,095 ‐2,899 +28% -952 ‐1,679 +43%
Net profit/loss EUR million -1,805 ‐3,617 +50% -756 ‐1,493 +49%
Earnings per share EUR -3.02 ‐7.56 +60% -1.26 ‐3.12 +60%
             
Total Assets EUR million 40,838 39,887 +2%      
Operating cash flow 18 363 -95% 784 -1,004  
Gross Investments EUR million 612 897 -32% 459 127 +261%
Adjusted Free Cashflow  EUR million -607 -510 -19% 340 -1,130
               
Net Debt EUR million 8,930 7,314 +22%      
 
Adjusted EBIT-Margin in % -36.3 -34.8 -1.5pts. -29.6 -88.6 +59.0pts.
               
Employees as of June 30   108,072 129,356 -16%  

1 Adjusted EBIT is not a measure under IFRS. Information on the calculation of the Adjusted EBIT is available in the Annual Report 2020 of Deutsche Lufthansa AG.

Lufthansa Group prepares for strong demand growth in 2021 after operating loss of 5.5 billion euros

Lufthansa Group issued this financial report:

  • Cost reductions further accelerated and operating cash drain limited to around 300 million euros per month in the fourth quarter
  • Carsten Spohr: “Internationally recognized, digital vaccination and test certificates must take the place of travel bans and quarantine”
  • Lufthansa Group Airlines prepared to offer up to 70 percent of capacity again in the short term
  • Cargo boom continues after record results in 2020
  • Lufthansa Group aims to offer 100,000 employees a long-term perspective

Carsten Spohr, CEO of Deutsche Lufthansa AG, says:

“The past year was the most challenging in the history of our company – for our customers, our employees and our shareholders. Travel restrictions and quarantine have led to a unique slump in demand for air travel. Now internationally recognized, digital vaccination and test certificates must replace travel bans and quarantine so people can once again visit family and friends, meet business partners or learn about other countries and cultures.”

Looking at the future development of the Lufthansa Group, Carsten Spohr said:
“The unique crisis is accelerating the transformation process in our company. 2021 will be a year of redimensioning and modernization for us. The focus will remain on sustainability: We are examining whether all aircraft older than 25 years will remain on the ground permanently. From the summer onwards, we expect demand to pick up again as soon as restrictive travel limits are reduced by a further roll-out of tests and vaccines. We are prepared to offer up to 70 percent of our pre-crisis capacity again in the short term as demand increases. With a smaller, more agile and more sustainable Lufthansa Group, we want to maintain our leading position worldwide and secure the jobs of around 100,000 employees in the long term.”

Result 2020

Demand fell dramatically in the year of the Corona pandemic and the associated travel restrictions. Revenue at the Lufthansa Group fell to 13.6 billion euros in 2020 (previous year: 36.4 billion euros). Despite rapid and extensive cost reductions, the Lufthansa Group had to report an Adjusted EBIT of minus 5.5 billion euros (previous year: profit of 2.0 billion euros). The Adjusted EBIT margin was minus 40.1 percent (previous year: plus 5.6 percent). The operating cash drain in the fourth quarter of 2020 was around 300 million euros per month. Progress in restructuring limited the impact of the intensified pandemic situation on earnings. Personnel costs were significantly reduced through workforce reductions, crisis agreements with social partners and short-time working. At year-end 2020, the number of employees was 110,000, around 20 percent lower than the previous year.  The reported EBIT loss was around 1.9 billion euros lower at minus 7.4 billion euros, mainly due to exceptional write-downs on aircraft and goodwill. Net income amounted to minus 6.7 billion euros (previous year: 1.2 billion euros).

Lufthansa Cargo achieves record result

In contrast to the passenger airlines, the Group’s cargo division benefited from rising demand over the course of the year. Buoyed by a strong increase in average yields amid persistently high demand, Lufthansa Cargo achieved a record result with an Adjusted EBIT of 772 million euros (previous year: 1 million euros) despite a 36 percent decline in freight capacity.

Capital expenditure at the Lufthansa Group was reduced by around two-thirds year on year in 2020 to 1.3 billion euros (previous year: 3.6 billion euros), mainly on the basis of extensive agreements with aircraft manufacturers. These provide for the postponement of aircraft deliveries in 2021 and beyond, so that annual capital expenditure will be lower than originally planned also in future years. Adjusted free cash flow was negative 3.7 billion euros (previous year: 203 million euros), with around 3.9 billion euros paid out for ticket reimbursements alone. This was offset by 1.9 billion euros in new bookings. The remaining cash outflow was limited by strict management of receivables and payables.

Net debt including lease liabilities increased to around 9.9 billion euros (previous year: 6.7 billion euros). Pension liabilities increased by 43 percent to 9.5 billion euros (previous year: 6.7 billion euros), mainly due to the drop in the interest rate used to discount pension obligations to 0.8 percent (previous year: 1.4 percent).

As of December 31, 2020, the Lufthansa Group had available liquidity of around 10.6 billion euros, of which 5.7 billion euros related to unutilized government stabilization measures. By the end of 2020, the Lufthansa Group had drawn down government stabilization funds of around 3.3 billion euros, of which 1 billion euros has already been repaid in the meantime.

In the second half of 2020, the Group successfully returned to the capital market and raised funds of 2.1 billion euros via bonds and aircraft financing. In addition, on February 4 the Group placed two bonds with a total volume of 1.6 billion euros, the proceeds of which were used among other things to repay the KfW loan of 1 billion euros. Overall, the long-term refinancing of all financial liabilities due in 2021 is thus secured.

“The latest transactions have shown how much confidence the market has in our company. The Lufthansa Group is well financed beyond 2021. This is also helped by the previously unused elements of the stabilization package, which we can draw on as needed to further strengthen our balance sheet,” said Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG.

Traffic figures for 2020

In 2020, the airlines of the Lufthansa Group offered around one third of the flights or a capacity (available seat kilometers) of 31 percent compared to the previous year. At 36.4 million, the number of passengers was 25 percent of the previous year’s figure, resulting in a load factor of 63 percent, 19.3 percentage points lower than previous year.

Due to the elimination of belly cargo capacity on passenger aircraft, cargo capacity declined by 39 percent. Freight kilometers sold fell by 31 percent to 7,390 million metric tons in the same period. At the same time, the load factor rose by 8.4 percentage points to 69.7 percent. Average yields rose by around 55 percent due to the shortage of supply.

The Lufthansa Group benefited from its hub system. Unlike competitors, who offer only point-to-point connections, the Lufthansa Group airlines were able to bundle the low traffic volumes at their hubs and thus maintain important connections. In addition, the close networking between passenger and cargo traffic at the hubs has made it possible to secure global supply chains.

Outlook

Last year, the number of employees fell by around 28,000. In Germany, a further 10,000 jobs will be reduced or the corresponding personnel costs will have to be compensated. The Group fleet will be reduced to 650 aircraft in 2023. By the middle of the decade, the Group expects the capacity level to return to 90 percent. In addition, the Group is examining the disposal of subsidiaries that offer only minor synergies with the core business.

Whenever restrictions are eliminated, bookings tend to increase steeply in the respective traffic area. For the full year 2021, the Group expects capacity on offer to increase to 40 to 50 percent of 2019 levels, and the expectation remains that positive operating cash flows will be generated when capacity on offer is above 50 percent. With the strategic expansion of the tourism business and a continued strong Lufthansa Cargo, the Group is in a position to take advantage of market opportunities in the short term. The boom in the cargo sector continues.

The average monthly operating cash drain, excluding working capital changes, capital expenditure and one-off and restructuring expenses, is expected to be limited to around 300 million euros in the first quarter of 2021.

“Thanks to our recent financing measures, we have sufficient liquidity to withstand a market environment that remains difficult. The next step is to strengthen our balance sheet and reduce debt. In doing so, we will reduce our costs through successful restructuring. Our crisis and cost management has taken effect much faster than originally planned. At the same time, our business has recovered more slowly than we had initially hoped. In addition to repaying the government stabilization funds, the goal of our financial strategy is for the financial markets to re-evaluate our creditworthiness to investment grade in the medium term,” says Remco Steenbergen.

The Lufthansa Group expects the operating loss, measured in terms of Adjusted EBIT, to be lower in 2021 than in the previous year.

Lufthansa Group announces around 20 new vacation destinations from Frankfurt, 13 new destinations from Munich

Lufthansa Group has made this announcement:

This summer, the airlines of the Lufthansa Group are offering the most extensive range of vacation destinations in years, thus further demonstrating the company’s knowledge of the leisure travel market.  Over the course of the summer Lufthansa plans to add around 20 new vacation destinations to its flight program from Frankfurt and 13 new holiday destinations from Munich. Special focus:  the Caribbean, the Canary Islands and Greece.

Effective vaccines, comprehensive testing services and strict hygiene concepts of airports and airlines are good prerequisites for the resumption, this summer, of long-awaited vacations. The airlines of the Lufthansa Group are already preparing for the resumption of travel and have an attractive, as well varied, flight program ready.

“Our leisure travel program for summer 2021 is stronger than ever. We expect many countries to relax travel restrictions towards the summer as more and more people have been vaccinated. We know that demand will increase sharply as soon as travel restrictions are removed – and we are well equipped to meet this with our excellent range of products and offers. There is a great yearning for travel and we believe that the summer months will reflect this,” says Harry Hohmeister, Member of the Executive Board of Deutsche Lufthansa AG.

Classic city and vacation destinations will continue to be offered, while the focus in Europe will be on the service to the Canary Islands and Greece. From Frankfurt and Munich, it will be even easier to reach your choice of Greek and Spanish holiday islands. Other attractive destinations in the flight program from Frankfurt are Cyprus (Paphos), Croatia (Rijeka), Italy (Lamezia Terme), Tunisia (Djerba), Ponta Delgada (Azores/Portugal) and Bulgaria (Varna). From Munich, new flights go to Jerez (Spain) and to the Greek destinations of Chania, Mykonos, Kos, Kavalla, Zakynthos and Preveza. Another new summer destination is Hurghada in Egypt.

Eurowings Discover, the Lufthansa Group’s new leisure travel-focused airline, will offer numerous long-haul destinations from Frankfurt. For the first time, there will be three weekly flights from Frankfurt to Punta Cana in the Dominican Republic and two weekly flights to Mombasa (Kenya) with onward flights to the dream island of Zanzibar (Tanzania). Beginning in June, there will be another first: a direct flight will take off three times a week to Anchorage in Alaska (USA).

In addition, the enchanting vacation destination of Mauritius will not only be offered in winter, but will also be on the summer flight schedule twice a week from 2021. The same applies to Lufthansa’s destination Malé in the Maldives, which will be on the flight schedule from Frankfurt up to three times a week in the summer and thus become a year-round destination.

And those who are already thinking about their next winter vacation far away from ice and snow can now plan a holiday with Eurowings Discover. For the first time, there will be three weekly flights from Frankfurt to Montego Bay in Jamaica from November 1 and three weekly flights from Rhein-Main Airport to Varadero in Cuba commencing from November 2. Existing long-haul operations from Frankfurt to leisure destinations are set to be expanded.

It pays to book flights quickly. The 2021 summer flights purchased by May 31, 2021, can be rebooked as often as desired and free of charge until that date. After that, one more rebooking free of charge is possible. Additional costs may arise if, for example, the original booking class is no longer available when rebooking for a different date or to a different destination.