Category Archives: Lufthansa Group

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.

Lufthansa Group adjusts mask requirement

Lufthansa Group airlines are introducing a requirement to wear a medical protective mask on their flights to and from Germany. The regulation comes into force on February 1. From that date, passengers will be required to wear either a surgical mask or an FFP2 mask or mask with the KN95/N95 standard during boarding, the flight and when leaving the aircraft. Everyday masks are then no longer permitted.

The airlines of the Lufthansa Group had already introduced a requirement to wear a mouth-nose mask on board their flights in May of last year, making them one of the pioneers worldwide. By adapting the regulation, the Lufthansa Group is now taking up the resolution passed by the federal and state governments in Germany on January 19. This means that uniform rules apply along the entire travel chain.

To enable passengers to adapt to the new rules in good time, they will be informed by e-mail and on the airlines’ websites and social media channels.

As before, an exemption from the obligation to wear a mouth-nose covering during the flight for medical reasons is only possible if the medical certificate is issued on a form provided by Lufthansa and a negative Covid 19 test is available that is not older than 48 hours at the scheduled start of the journey.

In principle, infection on board is very unlikely. All Lufthansa Group aircraft are equipped with the highest quality air filters, which ensure air quality similar to that in an operating theater. In addition, the air circulates vertically instead of being dispersed throughout the cabin.

Lufthansa sells LSG Europe to Gategroup

Lufthansa made this announcement:

In December 2019, Lufthansa Group and gategroup concluded a purchase agreement for the European operations of LSG Group. This accounts for about one third of LSG Group’s total business. gategroup now meets all requirements of the European Commission. Thus, the purchase agreement could now be executed, the so-called “Closing” has taken place. Both parties have agreed not to disclose the financial details of the transaction.

In addition to the European catering businesses, the purchase agreement also covers the lounge and train business and the retail convenience food brand Evertaste and its European facilities, the equipment business SPIRIANT and the retail stores of the “Ringeltaube” brand.

gategroup is a long-term partner for catering and services in Frankfurt, Munich and Zurich. Lufthansa will retain a minority stake in the Frankfurt and Munich catering facilities, which provide in-flight service for Lufthansa flights. This ensures a seamless transition of the catering business and a successful start of the cooperation. gategroup will introduce a new Lufthansa-dedicated Studio 50/8TM*, a culinary think tank and exclusive house of inspiration and co-creation which will set a new airline catering industry standard.

Carsten Spohr, CEO of Deutsche Lufthansa AG, said: “With the sale of LSG’s European business to gategroup, we are setting another milestone in the restructuring of the Lufthansa Group. We are focusing more strongly on our core airline business, we are becoming leaner, more efficient and reducing the Group’s internal complexity. My sincere thanks go to the 7,500 employees who are now joining gategroup. They have led our catering business in Europe to success in recent years and will continue to indulge Lufthansa guests with premium catering under the leadership of gategroup.”

Lufthansa Group continues to aim to sell the remaining international part of LSG Group as soon as the general conditions allow.

Lufthansa Group to be first to implement Star Alliance Biometrics and usher in a touchless customer experience at airports

Lufthansa Group has made this announcement:

Star Alliance, the world’s largest airline alliance, has completed development of an interoperable biometric identity and identification platform that will significantly improve the travel experience for frequent flyer programme customers of Star Alliance member airlines.

The Star Alliance Biometrics platform advances the vision of Star Alliance member airlines of delivering a seamless customer journey, while strengthening loyalty value proposition within its travel ecosystem.

Lufthansa Group (LHG) airlines, Lufthansa (a founding member of Star Alliance) and SWISS will be the first to use Star Alliance Biometrics for selected flights starting in November. Specific infrastructure is being installed at hub airports Frankfurt and Munich, reaping operational benefits at both locations.

Members of the Lufthansa and SWISS Miles & More Frequent Flyer Program who opt-in to biometrics will be able to pass through both security access and boarding gates in a touchless manner, an important health and hygiene safety measure in times of COVID-19.

In keeping with the requirement to wear masks in the airport terminal, it is not required to remove the mask for the biometric identity check. The identification process works for passengers wearing masks.

The Star Alliance Biometrics service is built upon NEC Corporation’s NEC I:Delight biometric and identity management platform software. The secure service is available at no cost to customers of the Miles & More program who have consented to share their biometric data with stakeholders of their choice during travel.

How does enrolment work?

Effective immediately, and with a few easy steps on their mobile device, Miles & More customers will have the option to enrol in Star Alliance Biometrics, accessed via a link within the Lufthansa app. Customers enrolling are asked to take a selfie, verify their identity with their passport, and opt-in to the airlines and airports where they want to use the service.

Enrol once, use often

They only need to enrol once and can then use their biometrics data multiple times at biometrics touchpoints of any participating airport whenever they travel with a Star Alliance member airline who has implemented Star Alliance Biometrics.

Data privacy and security

Personal data, such as photo and other identification details, are encrypted and safely stored within the platform. From the outset, the system has been designed in compliance with applicable data protection laws making use of the latest facial recognition technology. Storage of personal data is kept to a minimum – for example, no customer names are stored.

A list of Frequently Asked Questions can be found attached.

Jeffrey Goh, CEO of Star Alliance stated: “We are exceedingly proud to have founding member Lufthansa as the first airline to implement the Star Alliance Biometrics solution in both of its Frankfurt and Munich Airport hubs. This is a customer-centric solution that furthers our credentials in innovation, particularly its multi-airline and multi-airport capability. Whilst it offers a seamless customer travel experience, it is also a critical development that addresses the expectation of customers for a more touchless and hygienically safer experience. Star Alliance Biometrics is a key part of our strategy to be the most digitally advanced global airline alliance.”

Christina Foerster, Member of the Board, Customer, IT & Corporate Responsibility, said “The topic of biometrics will become increasingly important when travelling in the future. Especially during the pandemic, such touchless processes at the airport are a big plus. In the Lufthansa Group, biometric technology and solutions will increasingly ensure simplified and more efficient processes at airports, thereby significantly improving the travel experience of our passengers. I am very pleased that with Star Alliance Biometrics we will be able to offer interested frequent flyers biometric security checkpoint access and boarding via facial recognition at our Frankfurt and Munich hubs as from November. This is an important milestone for us. ”

“Optimizing travel processes for passengers is our top priority at Frankfurt Airport, and biometric processes offer our customers numerous advantages. Star Alliance Biometrics now creates a more efficient and – especially important in today’s times – touchless passenger journey, which offers greater security as well as more comfort and less waiting time. We are proud to be one of the first airports worldwide to offer this pioneering technology for boarding pass control and individual gates in Terminal 1 – Area A, together with our most important customers Star Alliance and Lufthansa. In the coming weeks and months we will gradually expand the range – also to new process points such as baggage drop-off,” says Dr. Pierre Dominique Prümm, Board Member Aviation and Infrastructure at Fraport AG.

“Biometrics offers us the opportunity to further accelerate and simplify processes at Munich Airport for the benefit of travelers”, said Jost Lammers, CEO of Munich Airport. “This not only increases passenger comfort, but also – thanks to the contactless process – hygiene standards and health protection. In this way, we are once again fulfilling our promise of quality as the only 5-star-airport in Europe.”

Lufthansa Group reports adjusted EBIT of minus EUR 1.3 billion in the third quarter

Lufthansa Group issued this financial statement:

The global coronavirus pandemic continued to have a considerable impact on the Lufthansa Group’s earnings development in the third quarter. However, compared to the second quarter, losses were reduced due to substantial cost savings and an expansion of the flight schedule in the summer months of July and August. Adjusted earnings (Adjusted EBIT) amounted to minus EUR 1.3 billion (previous year: plus EUR 1.3 billion). The average monthly operating cash drain, before changes in working capital and investments, was EUR 200 million. In the same period, sales fell to EUR 2.7 billion (previous year: EUR 10.1 billion). Net income was minus EUR 2 billion (previous year: plus EUR 1.2 billion). Operating expenses were cut by 43 percent in the third quarter compared to the previous year, partly as a result of significantly lower fuel costs, fees and a reduction in other costs that vary based on the extent of flight operations. Using short-time work for a large portion of the personnel in combination with other measures resulted in a reduction of fixed costs by more than a third. In addition, strict liquidity management limited the cash outflows.

“Strict cost savings and the expansion of our flight program enabled us to significantly reduce the operating cash drain in the third quarter, compared to the previous quarter. Lufthansa Cargo also contributed to this with a strong performance and a positive result of EUR 169 million. We are determined to keep following this path. We want to return to a positive operating cash flow in the course of the coming year. In order to achieve this, we are advancing restructuring programs throughout the Group with the aim to make the Lufthansa Group sustainably more efficient in all areas,” said Carsten Spohr, CEO of Deutsche Lufthansa AG.

First nine months of 2020

In the first nine months of this year, the Lufthansa Group generated revenues of EUR 11 billion (previous year: EUR 28 billion). Adjusted EBIT in this period was minus EUR 4.1 billion (previous year: plus EUR 1.7 billion). Net profit was minus EUR 5.6 billion (previous year: plus EUR 1 billion). The result was impacted by non-cash special items. This included, among other things, impairment losses of EUR 1.4 billion on 110 aircraft or rights of use, which are not expected to resume operations.

Cash flow and liquidity development

At the end of September, the Lufthansa Group had EUR 10.1 billion of cash at its disposal. This figure includes stabilization measures in Germany, Switzerland, Austria and Belgium totaling EUR 6.3 billion, which have not yet been utilized.

Free cash flow adjusted for the IFRS 16 effect was minus EUR 2.1 billion in the third quarter (previous year: EUR 416 million), mainly due to customer reimbursements of ticket costs for corona-related flight cancellations amounting to EUR 2 billion. This was partially offset by cash inflows from the expansion of flight activities in July and August, which were mainly driven by short-term bookings. In the first nine months, Adjusted free cash flow was significantly less negative than the operating result. It fell to minus EUR 2.6 billion (previous year: plus EUR 685 million). A 63 percent reduction of investments to EUR 1 billion (previous year: EUR 2.8 billion) made a major contribution to this.

Net debt at the end of the third quarter was EUR 8.9 billion (December 31, 2019: EUR 6.7 billion). The equity ratio fell by 15.4 percentage points to 8.6 percent, compared to the end of 2019 (December 31, 2019: 24 percent).

Business areas

The Adjusted EBIT of Network Airlines in the first nine months amounted to minus EUR 3.7 billion. Eurowings recorded a loss of EUR 466 million.

The development of the Logistics business segment stood out positively from the rest of the Group. Despite a 36 percent decline in freight capacity, triggered by a loss of freight capacity in passenger aircraft (“bellies”), Lufthansa Cargo’s revenue rose by 4 percent in the first nine months. This positive development was driven by the operation of one of the largest and most modern freighter fleets, comprising of 13 Boeing B777Fs (incl. Aerologic) and six MD-11s. Yields increased in all regions, also due to the global loss of cargo capacity in passenger aircraft. Earnings after nine months rose to EUR 446 million (previous year: minus 33 EUR million).

In contrast, Lufthansa Technik’s result for the same period fell to minus EUR 208 million (previous year: plus EUR 351 million). The result of the LSG Group was also burdened by the worldwide decline in air traffic and the associated decrease in demand for catering services, falling to minus EUR 269 million (previous year: plus EUR 93 million) in the first three quarters.

Traffic development in the third quarter of 2020

In the third quarter of 2020 the Lufthansa Group airlines carried 8.7 million passengers, 20 percent of previous year. Offered capacity fell to 22 percent of the previous year’s level. The seat load factor was at 53 percent, 33 percentage points below the previous year’s figure. Freight capacity fell by 47 percent due to a lack of capacity on passenger aircraft. The decline in freight kilometres sold was 34 percent. This reflects a 14-percentage point higher cargo load factor of 73 percent.

Traffic development in the first nine months of 2020

In the first nine months, the Lufthansa Group airlines carried a total of 32.2 million passengers, 29 percent of last year’s period. Offered capacity fell to 33 percent of the previous year’s level. At 68 percent, the seat load factor in this period was 15 percentage points lower than last year. Freight capacity fell by 40 percent and freight kilometres sold fell by 33 percent. This resulted in a 7-percentage point higher cargo load factor of 68 percent.

Outlook

“People around the world have a great desire to travel again soon. Together with our partners, we are ready and will do everything we can to fulfil this desire as quickly as possible and with the highest health and safety standards. The important thing now is to ensure health protection and freedom of travel, for example by means of widespread rapid tests,” says Carsten Spohr.

In the upcoming winter months, demand for air travel is expected to remain low due to the global increase of infection rates and the associated travel restrictions. The airlines of the Lufthansa Group will therefore be adjusting their original planning and will offer a maximum of 25 percent of last year’s capacity from October to December. This consistent capacity reduction will ensure that flight operations continue to make a positive contribution to earnings. The Lufthansa Group is benefiting from its hub strategy, which enables it to offer connections that would otherwise be uneconomical as point-to-point connections during this current market environment. Network Airlines benefit from bundling passenger streams at the Group’s hub airports.

In order to adjust to the long-term changes in the market, the Lufthansa Group is implementing extensive restructuring measures in all business units. In the fourth quarter, the Group expects this to result in non-cash one time and restructuring expenses. Their amount depends primarily on the further progress of negotiations with the social partners. The effects will be booked in Adjusted EBIT, for which a significant year-on-year decline is expected.

The average monthly operating cash drain, excluding changes in working capital, capital expenditure and one-off and restructuring expenses, is expected to be limited to around EUR 350 million in the fourth quarter. Adjusted free cash flow is expected to decline less in the fourth quarter compared to the third quarter due to a significantly lower volume of ticket refunds.

The Group remains on track for returning to a positive operating cash flow during the course of 2021. The prerequisite for this is that the pandemic situation allows for an increase in capacity to around 50% of pre-crisis levels.

A decision has been taken to significantly scale back operations for the upcoming winter months. In the winter flight schedule, 125 fewer aircraft will be operating than originally planned. In administrative areas, only activities that are necessary for operations, legally required or related to the necessary restructuring will take place.

“We are now at the beginning of a winter that will be hard and challenging for our industry. We are determined to use the inevitable restructuring to further expand our relative competitive advantage. We aspire to remain the leading European airline group following the end of the crisis,” says Carsten Spohr.

Lufthansa Group January – September July – September
2020 2019 Δ 2020 2019 Δ
Total revenue Mio. EUR 10,995 27,524 -60% 2,660 10,108 ‐74%
of which traffic revenue Mio. EUR 7,404 21,405 -65% 1,763 8,030 -78%
EBIT Mio. EUR ‐5,857 1,637 ‐2,389 1,220
Adjusted EBIT Mio. EUR ‐4,161 1,715 ‐1,262 1,297
Net profit/loss Mio. EUR ‐5,584 1,038 ‐1,967 1,154
Earnings per share EUR ‐10.79 2.18 ‐3.80 2.43
Total Assets Mio. EUR 39,010 44,187 -12%
Operating cash flow Mio. EUR -1,598 3,735 -1,961 1,342
Capital expenditures (gross) Mio. EUR 1,023 2,785 -63% 126 881 -86%
Adjusted free cash flow Mio. EUR -2,579 685 -2,069 416
Adjusted EBIT-margin in % -37.8 6.2 -44.0 pts. -47.4 12.8 -60.2 pts.
Employees as of 30.09. 124,534 138,350 -10%

 

Lufthansa Group reports preliminary results for the third quarter

Lufthansa Group has made this announcement:

The coronavirus crisis continued to have a considerable impact on Lufthansa Group’s earnings development in the third quarter of 2020. However, due to an expansion of the flight schedule in the summer months of July and August and considerable cost reductions, losses were reduced compared to the second quarter. On a preliminary basis, Adjusted EBIT in the third quarter was EUR -1,262 million (previous year: EUR 1,297 million). After nine months, the operating loss was EUR -4,161 million (previous year: EUR 1,715 million).

The Adjusted free cash flow for the first nine months of 2020 amounted to EUR -2,579 million (previous year: EUR 685 million). In the third quarter, Adjusted free cash flow was EUR -2,069 million (previous year: EUR 416 million). Payments of EUR 2.0 billion for corona-related flight cancellations were partly offset in the third quarter by cash inflows from the expansion of flight activities in July and August. The Group also benefited from strict working capital management and the postponement of tax payments. Net debt at the end of the third quarter was EUR 8,930 million (December 31, 2019: EUR 6,662 million).

At the end of September, the Group had liquidity of EUR 10.1 billion at its disposal. This figure includes undrawn funds from the EUR 9 billion stabilization packages from Germany, Switzerland, Austria and Belgium. Out of those, EUR 6.3 billion are still available.

The Group is also in a position to withstand further burdens from the corona pandemic. Demand for air travel is expected to remain low in the coming winter months due to the global evolution of the pandemic and the associated travel restrictions. According to current planning, the Group’s airlines will only offer a maximum of 25% of the previous year’s capacity in the fourth quarter to ensure that flight operations continue to generate a positive cash contribution. At the same time, Lufthansa Group is working intensively on restructuring measures in all business segments in order to achieve short and medium-term cost savings and minimize the operating cash outflow.

Coronavirus testing at Frankfurt Airport

Lufthansa Group has made this announcement:

With the school start in Baden-Wuerttemberg the summer travel season ends in whole Germany. At the end of the summer, CENTOGENE and Lufthansa are taking a positive interim balance of the test centers at German airports. Since the end of June, the partners have been jointly enabling passengers departing from or arriving at Frankfurt Airport (FRA), as well as those from the region, to have access to fast, reliable tests for the SARS CoV-2 virus. This first “walk-in” coronavirus test center in Germany serves as a blueprint for a successful test concept and helps passengers entering Germany from high-risk countries.

In the summer of 2020, more than 150,000 passengers were tested at Frankfurt Airport using CENTOGENE’s highly sensitive SARS-CoV-2 PCR test. On average, about one percent of the samples were positive during the last six weeks. Over 97 percent of the COVID-19 test results were digitally transmitted to passengers in August 2020 in less than 24 hours. Passengers who had registered for the test in advance only had to wait approx. 20 minutes before being tested. Most of them came from Spain, followed by the USA, Turkey and Croatia. In addition, almost 50,000 passengers were tested before departure, for example to travel to China or Dubai, where a negative test result is mandatory for entry. The general population from the region also used the test center. Since mid-August, another test center has also been in operation at Hamburg Airport.

Most recently, the testing capacity at the test center at Frankfurt has been expanded and the sampling area has been enlarged to provide a convenient option for travelers. The test center in Frankfurt now has a capacity of around 10,000 tests per day, which is more than sufficient even at times of high demand. On average, around 4,500 tests per day were carried out in the summer months of July and August. The CENTOGENE service complements the existing public laboratory capacities of the health care system and relieves them.

Lufthansa Group passengers can now also use the fast lane at the CENTOGENE test center at Frankfurt Airport and thus keep waiting times to a minimum. Special fast lanes are also available for Lufthansa Group status customers, business and first class travellers.

“It is correct that the testing strategy for travellers from high-risk countries will be maintained in September. Instead of abolishing the tests from October and dismantling the successfully established testing infrastructure at airports, the existing testing capacities should be further expanded and used even more extensively. The data obtained from the tests can make a significant contribution to reacting to the current infection situation with targeted and appropriate measures. The cooperation between Lufthansa and CENTOGENE, which is continuously expanding its capacities, serves as a benchmark for a successful test model here,” says Christina Foerster, Lufthansa Group Customer, IT & Corporate Responsibility Board Member.

Dr. Volkmar Weckesser, CIO CENTOGENE, emphasizes: “We firmly believe that broad-based testing is the key to preventing a further outbreak and supporting a new normal – especially where mobility is an essential contribution to the efficiency of our economy. This is why we have introduced efficient, digital workflows for COVID-19 testing at two of Germany’s largest airports. We are absolutely convinced that this decision is correct and will therefore continue to significantly increase our testing capacities. In this way, we can make an important contribution to the testing infrastructure – also for medical personnel or the population in the region. Above all, thanks to the latest technology and innovation, we are also working intensively on new, faster test methods.

Passengers can perform the test in a sample collection center in the immediate vicinity of the main terminal of Frankfurt Airport. All results are made available to passengers via a secure digital platform and linked to the flight ticket to ensure automated confirmation for travelers flying to countries with respective entry restrictions. In addition, passengers can choose an identity confirmation service that certifies authorities that the test results match the passengers’ identity.