Category Archives: Lufthansa Group

Lufthansa Group Airlines welcome around 14.2 million passengers on board in July 2018

In July 2018, the Lufthansa Group airlines welcomed around 14.2 million passengers. This shows an increase of 8.2% compared to the previous year’s month. The available seat kilometers were up 7.0% over the previous year, at the same time, sales increased by 7.0 percent. As compared to June 2017, the seat load factor decreased slightly by 0.1 percentage points to 86.3%.

Cargo capacity increased 1.8 % year-on-year, while cargo sales decreased by 2.9% in revenue tonne-kilometer terms. As a result, the Cargo load factor showed a corresponding reduction, decreasing by 3.1 percentage points to 64.1%.

Network Airlines

The Network Airlines Lufthansa German Airlines, SWISS and Austrian Airlines carried 10.2 million passengers in July – 5.2% more than in the prior-year period. Compared to the previous year, the available seat kilometers increased by 4.1% in June. The sales volume was up 3.7% over the same period, decreasing seat load factor by 0.3 percentage points to 86.3%.

In July, the strongest passenger growth of the network airlines was recorded at the Munich hub, where the number of passengers increased by 9.0 percent compared to the same month last year. The number of passengers increased by 4.5% in Zurich, 4.0% in Vienna and 3.8% in Frankfurt. The underlying offer also increased to varying degrees: in Munich by 11.7%, in Zurich by 7.3%, and in Vienna by 4.3%. The number of seat kilometres available in Frankfurt fell slightly by 0.3 percent.

Lufthansa German Airlines transported 6.8 million passengers in July, a 5.8% increase compared to the same month last year. A 3.1% increase in seat kilometers in July corresponds to a 2.2% increase in sales. Furthermore, the seat load factor was 86.0%, therefore 0.8 percentage points below last year’s level.

Eurowings

Eurowings (including Brussels Airlines) carried around 3.9 million passengers in July. Among this total, 3.6 million passengers were on short-haul flights and 225,000 flew long-haul. This amounts to an increase of 16.9% in comparison to the previous year. July capacity was 21.4% above its prior-year level, while its sales volume was up 23.3%, resulting in an increase of seat load factor by 1.3 percentage points to 86.0%.

On short-haul services the airlines raised capacity 17.2% and increased sales volume by 20.6%, resulting in a 2.5 percentage points increased seat load factor of 86.8%, compared to July 2017. The seat load factor for the long-haul services decreased by 1.3 percentage points to 84.4% during the same period, following a 31.2% increase in capacity and a 29.3% rise in sales volume, compared to the previous year.

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Ryanair responds to Lufthansa’s claims about Laudamotion

Laudamotion Airbus A320-214 OE-LOE (msn 4269) FRA (Marcelo F. De Biasi). Image: 941409.

Ryanair on July 13 confirmed that Lufthansa Group is making false claims about Laudamotion.

Lufthansa’s claim that it has “fully complied with all requirements of the European Commission regarding the required transfer of aircraft to Laudamotion” is simply untrue. Lufthansa agreed to transfer 11 aircraft to Laudamotion, yet as of July 13, Lufthansa has only delivered 9 aircraft.

1. One of the aircraft, which was supposed to be delivered “at the beginning” of June, has now been delayed until at least the end of August, which means Laudamotion has lost the benefit of this aircraft (and its slots) during the peak summer months.

2. Not alone has Lufthansa failed to honor its obligations to lease the 11 aircraft, but the lease costs of the aircraft it has leased to Laudamotion are substantially higher than market rates for Airbus A320’s of this age.

3. Laudamotion has repeatedly honored both its aircraft lease payments and maintenance reserves to Lufthansa. Lufthansa’s claims of “repeated failure” to pay is false.

4. Lufthansa has used every tactic in the book to harm and damage Laudamotion including withdrawing flying business from Laudamotion (which Lufthansa had originally agreed) then refusing to pay over €1.5m of lease payments properly due to Laudamotion for flying carried out on behalf of Lufthansa in March, April and May.

Despite Lufthansa owing Laudamotion over €1.5m in overdue lease payments for the months of March, April and May, Lufthansa has attempted to terminate all 9 aircraft leases on unfounded legal grounds, even though lease rentals for the full month of July had already been paid at the end of June.

Ryanair’s Juliusz Komorek said:

“Lufthansa is abusing its dominant position in the German and Austrian markets in a blatant attempt to eliminate a much smaller, Austrian competitor, Laudamotion. Lufthansa’s attempt to terminate Laudamotion’s 9 aircraft leases during the peak of the summer period, at a time which would cause maximum damage to Laudamotion and its customers, is in breach of its obligations to the EU.

Lufthansa dominates the German, Austrian, and Swiss markets and the fact that it is now abusing this position to try to remove Laudamotion’s aircraft fleet, while refusing to pay Laudamotion lease payments that are months overdue, is in flagrant breach of fair procedure and competition rules. It is Lufthansa who has repeatedly failed to pay Laudamotion over €1.5m of lease payments for March, April and May.”

Top Copyright Photo: Laudamotion Airbus A320-214 OE-LOE (msn 4269) FRA (Marcelo F. De Biasi). Image: 941409.

Laudamotion aircraft slide show:

Laudamotion’s routes from Dusseldorf and Berlin this coming winter:

 

Lufthansa Group refutes false allegations by Ryanair

Lufthansa Group has issued this statement:

Irish low-cost carrier Ryanair issued a press release on its planned takeover of Laudamotion. The Ryanair allegations are completely unfounded.

Lufthansa has fully complied with all EU Commission obligations regarding the required transfer of aircraft to Laudamotion. This is true of both the number of aircraft involved and their leasing terms.

All the aircraft covered by the EU derogation decision were offered for sale to Laudamotion by Lufthansa. Laudamotion rejected this offer, preferring to lease the aircraft instead.

Laudamotion has recently failed – repeatedly – to meet its contractually-agreed lease payment obligations.

As the Eurowings Group needs aircraft, Lufthansa has exercised its contractually-agreed right of termination because of a violation of contractual terms by Laudamotion, and has terminated the lease agreements on nine aircraft due to the non-payment of the lease amounts involved.

Lufthansa Group airlines introduce new economy “Light” fare on North American routes

"Team D" Olympic logo

As of summer 2018, Lufthansa Group passengers will be able to book a so-called Economy “Light” fare on routes to North America served by Lufthansa, Swiss, Brussels Airlines and Austrian Airlines.

As the basic rate, the new fare is the least expensive option for price-conscious passengers only travelling with carry-on luggage and who do not require any ticket flexibility. For an additional fee, passengers will be allowed to add one piece of luggage or request a seat reservation on an individual basis. Meals and drinks will continue to be served to passengers on board free of charge.

Lufthansa has been testing a Light fare since October 2017 on selected routes between Scandinavia and North America. Passengers can buy a basic rate with carry-on luggage on flights between Sweden, Denmark, Norway and selected North American destinations.

In 2015, the Lufthansa Group Airlines introduced a Light fare on their European routes. The various air fare options mainly differ with respect to the free baggage allowance, seat reservations as well as the possibilities to cancel or rebook flights. Standard features of all fares include the flight, carry-on luggage weighing up to 8 kg, a snack and drinks on board, a fixed seat assignment at check-in as well as bonus and status miles.

Copyright Photo: Lufthansa Boeing 747-830 D-ABYA (msn 37827) (Team D) IAD (Brian McDonough). Image: 941203.

Lufthansa aircraft slide show:

Lufthansa Group airlines welcomed around 12.2 million passengers on board in April 2018

Lufthansa's first 747-400 in the new revised  livery - "optimised blue"

In April 2018, the airlines of the Lufthansa Group welcomed around 12.2 million passengers. This shows an increase of 9.1% compared to the previous year’s month, although last year’s German Easter holidays fell in April. The available seat kilometers were up 7.4% over the previous year, at the same time, sales increased by six percent. The seat load factor decreased by 1.1 percentage points compared to April 2017 to 81.2%. In the first four months of 2018, the Group continues to record levels of capacity, capacity utilization and passenger numbers.

The currency-adjusted sales environment developed positively in April compared to the previous year.

Cargo capacity increased 6.9% year-on-year, while cargo sales were up 3.4% in revenue tonne-kilometer terms. As a result, the Cargo load factor showed a corresponding reduction, decreasing 2.3 percentage points in the month to 67.2%.

Above Copyright Photo: Lufthansa tweets the shade of blue for the new livery. Lufthansa Boeing 747-430 D-ABVM (msn 29101) DUB (Greenwing). Image: 941854.

Network Airlines
The Network Airlines Lufthansa German Airlines, Swiss and Austrian Airlines carried 8.9 million passengers in April, 6.1% more than in the prior-year period. Compared to the previous year, the available seat kilometers increased by 5.4% in April. The sales volume was up 3.8% over the same period, decreasing seat load factor by 1.2 percentage points to 81.2%.

Lufthansa German Airlines transported 5.9 million passengers in April, a 4.7% increase compared to the same month last year. A 3.8% increase in seat kilometers in April corresponds to a 1.7% increase in sales. Furthermore, the seat load factor was 80.7%, therefore 1.7 percentage points below the prior-year’s level.

Germanwings' 2016 "Borussia Dortmund Mannschaftsairbus" (Team Airbus) logo jet

Above Copyright Photo: Eurowings Airbus A320-214 WL D-AIZR (msn 5525) (BVB 09 – Mannschaftsairbus) LHR (SPA). Image: 941520.

Eurowings Group
The Eurowings Group with the airlines Eurowings (including Germanwings) and Brussels Airlines carried around 3.3 million passengers in April. Among this total, three million passengers were on short-haul flights and 250,000 flew long-haul. This amounts to an increase of 18.3% in comparison to the previous year. April capacity was 17.9% above its prior-year level, while its sales volume was up 17.0%, resulting in a decreased seat load factor by 0.7 percentage points of 81.2%.

On short-haul services the Airlines raised capacity 20.9% and increased sales volume by 20.3%, resulting in a 0.4 percentage points decrease in seat load factor of 80.3%, compared to April 2017. The seat load factor for the long-haul services decreased by 0.9 percentage points to 83.2% during the same period, following a 12.0% increase in capacity and a 10.8% rise in sales volume, compared to the previous year.

Lufthansa Group orders 16 additional aircraft

Lufthansa Cargo Boeing 777-FBT D-ALFE (msn 41678) YYZ (TMK Photography). Image: 938090.

The Supervisory Board of Deutsche Lufthansa AG has approved the order of up to 16 additional aircraft. The list price of the aircraft is approximately 2.1 billion euros. Delivery is scheduled to take place in stages until 2022. The investment plan for the 2018 fiscal year remains unchanged.

The order includes two Boeing 777-300ER long-haul aircraft for Swiss.

Photo: Lufthansa Group.

An additional two Boeing 777F freighters (top) will be ordered for Lufthansa Cargo. The modern freighter aircraft will replace MD-11 cargo planes in the future.

The Supervisory Board has also approved the order of up to twelve short- and medium-haul A320-type aircraft. This includes six delivery options for aircraft of the Airbus A320neo (new engine option) type in 2022 that were converted to fixed orders. When they are delivered, they will replace older aircraft in the flight operations of the Lufthansa Group. Depending on availability, up to six additional A320ceo (current engine option) will be ordered. The plan is to deploy them at Lufthansa this year already, in order to offset delivery delays for Airbus A320neo aircraft.

Top Copyright Photo: Lufthansa Cargo Boeing 777-FBT D-ALFE (msn 41678) YYZ (TMK Photography). Image: 938090.

Lufthansa Cargo aircraft slide show:

Lufthansa Group continues its successful development in the first quarter of 2018

Eurowing's 2016 "Visit Sweden - Goteborg" promotional livery

The Lufthansa Group continues its successful path in the first quarter of 2018, and has started well into the new year. The Group’s Network Airlines increased their Adjusted EBIT margin significantly by 3.2 percentage points to 2.4 per cent in what is traditionally the weakest quarter for all airlines. Lufthansa Cargo achieved an even stronger Adjusted EBIT margin improvement: up 4.3 percentage points to 10.1 per cent. These improved earnings were largely offset, however, by significant one-off costs at Eurowings from its growth in the context of the Air Berlin insolvency. As Lufthansa Technik and “Others & Consolidation” showed earnings declining to the levels of earlier years, the total Adjusted EBIT – the main key performance indicator of the Lufthansa Group – increased only slightly by EUR 1 million to EUR 26 million for the first-quarter.

Despite new record numbers of passengers carried and historically high seat load factors, the total revenues of around EUR 7.6 billion (of which EUR 5.8 billion traffic revenues) for the first-quarter were broadly on previous-year level due to the first-time implementation of the new IFRS 15 accounting standard. Without this, first-quarter revenues would have been increased by 4.5 per cent. The net group result for the period improved by EUR 11 million to EUR -57 million.

Fuel costs for the first three months of 2018 virtually remained on prior-year level at EUR 1.2 billion (up 0.9 per cent) since  volume growth and higher average prices were compensated by currency effects and successful hedging. Cumulative unit costs excluding fuel and currency factors for the passenger airlines were further reduced by 0.5 per cent (despite the added burden of the one-off costs at Eurowings), thanks to particularly effective cost reductions at the Network Airlines. At the same time, first-quarter unit revenues excluding currency factors increased by 1.2 per cent.

“We remain well on track, and have achieved another good set of results for the first quarter 2018,” says Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “Despite incurring high one-off expenses at Eurowings, we again managed to steadily further reduce our unit costs while simultaneously investing in the quality of our product.”

Network Airlines

Adjusted EBIT for the Group’s Network Airlines – Lufthansa German Airlines, Swiss and Austrian Airlines – amounted to EUR 114 million in the first quarter of 2018, EUR 154 million above the prior-year result. The Network Airlines thus made a major contribution to the Group’s good first-quarter result. With a continued high demand, unit costs excluding fuel and currency factors were reduced by 1.9 per cent, while unit revenues excluding currency factors increased by 1.5 per cent. Lufthansa German Airlines raised its Adjusted EBIT by EUR 95 million to EUR 83 million and achieved its highest first-quarter Adjusted EBIT margin of the past ten years. SWISS improved its first-quarter Adjusted EBIT by EUR 64 million to a record EUR 99 million, implying an Adjusted EBIT margin of a good nine per cent and remaining the Group’s most profitable airline. Austrian Airlines saw its first-quarter Adjusted EBIT decline EUR 8 million to EUR  67 million following extensive flight cancellations on three days in the period as a result of works meetings related to wage negotiations.

“Our modernization is paying off,” Ulrik Svensson continues. “We are again in a position to grow our core business profitably. And we are able to grow in those areas where the quality is best for our customers and the costs are low. This is why we saw about a third more growth in first-quarter passenger numbers at our hub in Munich than in Frankfurt.”

The Eurowings Group

Eurowings is growing successfully. Despite a 28.8 percent year-on-year increase in its first-quarter capacity, the airline’s unit revenues excluding currency factors were up 3.5 percent. But with significant one-off costs from the integration of former parts of Air Berlin, first-quarter unit costs excluding fuel and currency factors were 7.6 per cent above their prior-year level. Adjusted EBIT for the Eurowings Group declined EUR 71 million to EUR  203 million. One-off expenses will continue to burden unit cost trends at Eurowings in the months ahead.

Aviation Services

Among the Group’s Aviation Services companies, Lufthansa Cargo continued its positive development, almost doubling its first-quarter Adjusted EBIT to EUR 65 million (an increase of EUR 32 million). Adjusted EBIT for Lufthansa Technik was down EUR 34 million to EUR 103 million, amongst others due to a weak US dollar and an extraordinarily strong first quarter last year. LSG Group raised its first-quarter Adjusted EBIT slightly by EUR 3 million to EUR 1 million. In “Others & Consolidation”, Adjusted EBIT for the first-quarter period declined EUR 83 million to EUR  54 million, which is the level seen in the years before 2017.

Key financial indicators

Operating cash flow remained broadly on its prior-year level. Pension fund provisions were up 8.3 per cent at EUR 5.5 billion, owing largely to the reduction of the discount rate from 2.0 to 1.9 per cent.

Net financial debt declined almost 30 per cent compared to the end of 2017 to EUR 2.1 billion, further strengthening the Group’s financial stability. In view of this, the rating agency S&P recently raised its outlook for the Lufthansa Group’s investment grade rating to ‘positive’. The equity ratio decreased by four percentage points to 22.5 per cent, mainly due to the impact of the first time implementation of the new reporting standards and to the increase in pension provisions following the discount rate reduction.

Outlook for 2018 unchanged

Compared to its guidance of 15 March, the Lufthansa Group now expects an organic capacity growth of some 6 per cent for 2018. Due to this one-percentage-point reduction in capacity growth and a weakening of the US dollar, the guidance for fuel costs has been lowered by EUR 100 million. Annual fuel costs are now expected to increase by EUR 600 million in 2018 to EUR 5.8 billion. This cost increase can be largely offset by an improved operating performance. The guidance for 2018 thus remains unchanged for an Adjusted EBIT slightly below previous year’s record level. Also unchanged is the guidance for a reduction in unit costs excluding fuel and currency factors by 1 to 2 per cent and a stable development of unit revenues excluding currency factors.

IFRS 15

The IFRS 15 ‘Revenue from Contracts with Customers’ reporting standard was implemented for the first time in the 2018 first-quarter accounts and financial statements. Its implementation leads to changes in revenue and cost positions, especially at the Network Airlines and the Eurowings Group. To take one example, passenger-based fees and charges which were formerly accounted on both the income and the expenses side are now netted in the profit and loss account. This reduces both income and expenses. But since EBIT is not affected, EBIT margin increases mathematically. Prior-year figures have not been restated.

Lufthansa Group   January
to March
Change Change
2018 2017 reported excl. IFRS 15
Total revenues EUR m 7,640 7,691 -0.7% +4.5%
of which traffic   revenue EUR m 5,785 5,808 -0.4% +7.9%
EBIT EUR m 27 16 +68.8%  
Adjusted EBIT EUR m 26 25 +4.0%  
Adjusted EBIT margin in %    0.3% 0.3% 0 pts.  
Net result EUR m -57 -68 +16.2%  
Gross investments1) EUR m 714 755 -5.4%  
Operating cash flow EUR m 1,625 1,648 -1.4%  
Employees as of 31 March 132,620 128,541 +4,079  
Earnings per share EUR -0.12 -0.15 +20.0%  

1) excluding cash-out from equity investments

Only the 2018 figures are stated in accordance with the new IFRS 15. Prior-year figures have not been restated.

Copyright Photo: Eurowings grew at 28.8 percent in the first quarter. Eurowings Airbus A320-214 WL D-AEWG (msn 7121) (Visit Sweden – Goteborg) ZRH (Andi Hiltl). Image: 941518.

Eurowings aircraft slide show: