Category Archives: Lufthansa Group

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:

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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:

 

In March Lufthansa Group airlines increased capacity utilization to a new record level despite significantly increased services

  • Occupancy rate rises by 3.9 percentage points to 81.2 percent in March
  • Number of flights increases by 8.1% at the same time
  • Around 11.1 million passengers fly with Lufthansa Group Airlines , 15.7 percent more than a year earlier 
  • Currency adjusted yield indication stable
  • Lufthansa grows especially in Munich
  • Point-to-point airlines carry around a third more passengers

In March 2018, the airlines of the Lufthansa Group welcomed around 11.1 million passengers. This shows an increase of 15.7% compared to the previous year’s month. The available seat kilometers were up 9% over the previous year, at the same time, sales increased by 14.5%. The seat load factor increased by 3.9 percentage points compared to March 2017 to 81.2%. This is a new record which is partly also connected with the postponement of the Easter holidays from April to March. Capacity utilization also reached an all-time high of 77.8 percent in the first quarter of 2018. Around 28.6 million passengers flew with the airlines of the Lufthansa Group in the first three months of this year.

The currency adjusted yield indication remained stable in March compared to previous year.

Cargo capacity increased four percent year-on-year, while cargo sales were up 0.4% in revenue tonne-kilometer terms. As a result, the Cargo load factor showed a corresponding reduction, decreasing 2.6 percentage points in the month to 71.3%.

Network Airlines

The Network Airlines, Lufthansa German Airlines, Swiss and Austrian Airlines, carried 8.2 million passengers in March, ten percent more than in the prior-year period. Compared to the previous year, the available seat kilometers increased by 5.3% in March. The sales volume was up 10.4% over the same period, increasing seat load factor by 3.7 percentage points to 81.1%.
Lufthansa German Airlines transported 5.7 million passengers in March, a 10.2% increase compared to the same month last year. A 4.8% increase in seat kilometers in March corresponds to a 9.2% increase in sales. Furthermore, the seat load factor was 81.5%, therefore 3.3 percentage points above the prior-year’s level. Lufthansa is growing above all at its Munich location. In March, 12.6% more passengers took off from the Bavarian 5-star hub than a year earlier. This means that growth in Munich was a third higher than in Frankfurt, where 9.2% more passengers flew than in the same month last year.

Point-to-Point Airlines

Eurowings Airbus A320-214 WL D-AEWS (msn 7439) ZRH (Paul Bannwarth). Image: 941519.

The Lufthansa Group’s Point-to-Point Airlines – Eurowings (including Germanwings) and Brussels Airlines – carried around 2.9 million passengers in March. Among this total, 2.7 million passengers were on short-haul flights and 260,000 flew long-haul. This amounts to an increase of 35.4% in comparison to the previous year. March capacity was 30.6% above its prior-year level, while its sales volume was up 39.1%, resulting in an increased seat load factor by five percentage points of 81.3%.

On short-haul services the Point-to-Point Airlines raised capacity 34.8% and increased sales volume by 48.4%, resulting in a 7.3 percentage points increase in seat load factor of 79.3%, compared to March 2017. The seat load factor for the long-haul services increased by 1.6 percentage points to 85% during the same period, following a 23.5% increase in capacity and a 25.8% rise in sales volume, compared to the previous year.

Copyright Photo: Eurowings Airbus A320-214 WL D-AEWS (msn 7439) ZRH (Paul Bannwarth). Image: 941519.

Eurowings aircraft slide show:

Lufthansa Group achieves its best financial result in its history

"Team D" Olympic logo

Results for 2017

  • Adjusted EBIT increased around 70 percent to some EUR 3 billion
  • Adjusted EBIT margin raised 2.9 percentage points to 8.4 percent
  • Earnings growth primarily driven by the Group’s airlines (including cargo)
  • Revenues up 12.4 percent to EUR 35.6 billion
  • Unit costs further reduced
  • 60 percent higher dividend proposed at EUR 0.80 per share

Outlook for 2018

  • Stable unit revenue development expected
  • Unit costs to be further reduced by 1 to 2 percent
  • Higher fuel costs of some EUR 700 million expected to be largely compensated by improved operating performance
  • Adjusted EBIT for the year expected to be only slightly below its record in 2017

The Group continues;

“Our endeavors of the past few years are paying off. Our modernization has a sustainable impact. We have achieved the best result in the history of our company. 2017 was a very good year for our customers, our employees and our shareholders,” says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. “Last year we were able to reduce costs again, while at the same time becoming the first – and the only – airline in Europe to be awarded a five-star rating. We are lowering our costs where this does not affect the customer, and are simultaneously further investing in our product and service quality.”

Total revenues for the Lufthansa Group in 2017 amounted to EUR 35.6 billion, a 12.4 percent increase on the previous year. The Adjusted EBIT of EUR 2.97 billion was a significant 69.7 percent year-on-year improvement. And the 8.4 percent Adjusted EBIT margin was up 2.9 percentage points compared to previous year. EBIT for the year increased more than EUR 1 billion to EUR 3.3 billion. The strong increase of EBIT includes the positive EUR 582 million one-off effect from agreeing on the collective labor agreement with the Vereinigung Cockpit union for the pilots of Lufthansa, Lufthansa Cargo and Germanwings, which was recognized in the income statement in December.

“We are particularly pleased that we were again able to lower our passenger airlines’ unit costs excluding fuel and currency factors last year. This is in particular as passenger related costs were actually up due to higher load factors, the variable remuneration was higher in light of strong result development, and additional costs because of compensation paid for the flight cancellations at Air Berlin burdened our cost as well,” adds Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “Excluding these one-off effects, we reduced our unit costs by 1.8 percent.”

The Lufthansa Group invested some EUR 3 billion in 2017, around a third more than in the previous year. This is partly due to investments of some EUR 900 million into aircraft from the Air Berlin flight operations. “These higher investments also reflect the increased size of our Group. But investments relative to revenue remain on one level with the world’s most successful airlines’,” comments Ulrik Svensson. “Important is that the return on capital continues to increase. In 2017, our Adjusted ROCE (after tax) improved by 4.6 percentage points to 11.6 percent.”

Despite the higher capital expenditure, free cash flow almost doubled in 2017 to EUR 2.3 billion. Net financial debt rose 6.8 percent to EUR 2.9 billion. This figure includes an initial EUR 1.7 billion funding for the new defined contributions model of the flight attendants’ pension fund. Total pension provisions decreased by EUR 3.2 billion in 2017. The year-end equity ratio stood at 26.5 percent, an increase of 5.9 percentage points.

“On the basis of these very good results, we propose a dividend of EUR 0.80 per share to the Annual General Meeting,” says Ulrik Svensson. “This is a 60 percent increase of the pay-out compared to last year. This is the minimum level of dividend payment that we aim to maintain in the coming years.”

Network Airlines

The Group’s Network Airlines – Lufthansa, SWISS and Austrian Airlines – increased their Adjusted EBIT by nearly 50 percent to some EUR 2.3 billion. With strong demand and a positive pricing environment, the Network Airlines raised their EBIT margin 2.6 percentage points to almost ten percent.

Point-to-Point Airlines 

Despite the significant expenses in the context of acquiring capacities from Air Berlin, Eurowings reduced its unit costs excluding fuel and currency factors by 6.5 percent. On the back of this and strong market demand, Adjusted EBIT increased by some EUR 200 million. Despite adverse one-off factors related to market consolidation, the Group’s Point-to-Point Airlines improved their Adjusted EBIT margin by 7.3 percentage points and achieved a positive Adjusted EBIT of around EUR 100 million. The inorganic growth after the insolvency of Air Berlin will make a positive contribution to the Point-to-Point Airlines’ from 2019 onwards.

Aviation Services

The Group’s Aviation Services in total achieved a very good result, though the development among the business segments was quite different. A combination of cost reductions and strong demand helped Lufthansa Cargo to improve its Adjusted EBIT by almost EUR 300 million to EUR 242 million. The EUR 415 million earnings of Lufthansa Technik were broadly in line with prior-year levels. Against the background of the continuing transformation of its European operations, the LSG Group sustained a EUR 38 million decline in its earnings for the year to EUR 66 million.

Outlook

EUR 700 million higher fuel costs can be largely offset by an improved operating performance, so that for 2018 in total an Adjusted EBIT only slightly below previous year is expected. Organic capacity is expected to increase by some seven percent, as unit revenues excluding currency factors should remain broadly stable. Unit costs excluding fuel and currency factors should be further reduced by 1 to 2 percent.

“We will continue to consistently pursue our modernization,” concludes Carsten Spohr. “And in doing so, we will retain our clear focus on reducing our costs and at the same time raising our quality. This is the only way to sustainably increase our profitability. From a position of strength, we will continue to drive consolidation in Europe.”

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

Lufthansa aircraft slide show:

Video: Building a Lufthansa Boeing 777-9X model:

Lufthansa Group female pilots take off

On March 8, 2018, six all-female crews from Lufthansa, Swiss, Austrian Airlines, Eurowings and Brussels Airlines will start their morning rounds to Berlin on time for the International Women’s Day. The jets are flown from Frankfurt, Munich, Düsseldorf, Vienna, Zurich and Brussels by two female pilots each.

In order to send out another signal on this day, the FlyingLab on flight LH440 from Frankfurt to Houston is under the command of a purely female crew – in the cabin, in the cockpit and also in front of the camera. The Airbus A380’s in-flight conference will not only focus on the various aspects of digital transformation, but will also highlight the achievements of women in a technology-dominated environment. A total of six speakers will talk about artificial intelligence, virtual reality and the future of work and mobility. The FlyingLab is the world’s only open innovation platform in the air. It consists of an on-board conference, which every passenger can follow on his or her own personal device and the opportunity to test the latest innovative products and services. The aim of this FlyingLab will be the South by Southwest (SXSW) – the world’s largest festival for interactive marketing, music and film that takes place annually in Austin, Texas.

“We have already been able to increase the number of female applicants at our pilot flying school by addressing applicants in a more targeted manner and by making it easier to combine family and work,”says Dr. Bettina Volkens, Member of the Executive Board for Human Resources and Legal Affairs of Deutsche Lufthansa AG. “15 percent of our junior pilots are currently female.”

As early as 1988, the first two women began their scheduled service at Lufthansa. In 2010, there was a premiere for the global airfreight industry: A freighter from Lufthansa Cargo took off with a purely female crew. Women in the cockpit are no longer rare. Approximately six percent of the Lufthansa Group’s pilots are female and their share has risen steadily over the past few years. Approximately 80 percent of the cabin crew are female. For the growing number of female pilots, Lufthansa has had the word “Kapitänin” (“Captain”) specially approved by the Gesellschaft für deutsche Sprache.

In addition to the cockpit, the Lufthansa Group also aims to increase the proportion of women in management positions. This is currently 15 percent. By 2021, the proportion of female executives at first management level is to be increased to 18 percent and at second management level to as much as 24 percent. „In order to meet these goals, we are preparing our best female junior executives for their future management responsibilities with our own one-year program,” says Volkens. At the same time, it is important to me to reduce unconscious bias when filling vacancies. A specially programmed video supports our hiring managers in selecting the right personnel for the right job.

Photo: Lufthansa Group.