Lufthansa is continuing its commitment to football and has extended its partnership with the German football association Deutscher Fuรball-Bund (DFB)ย until 2022. Lufthansa therefore remains an official partner of DFB. As the โofficial airlineโ, Lufthansa flies the players, coaches, staff and delegation members of the DFB team to international matches and tournaments. โWe are delighted to continue our long-standing and good partnership with DFB. For many years now, it has been a special honor for us to fly the German national team to their major tournaments around the world,โ said Markus Binkert, CCO of the Lufthansa Hub Munich and Senior Vice President Marketing. So far, the highlight of the long-standing partnership has been the flight of the Lufthansa โFanhansa Siegerfliegerโ returning the national team to Germany from Brazil with the World Cup trophy after their 2014 win.
The contract guarantees Lufthansa extensive rights and marketing services from DFB, especially in the years featuring the European Football Championship and the World Cup, among other things.
Lufthansa has been cooperating with DFB for many years now and also has long-standing partnerships with the German sports aid foundation Stiftung Deutsche Sporthilfe as well as the German Olympic Sports Confederation (DOSB). The company is also a co-sponsor of Germanyโs National Paralympic Committee (DBS).
On the financial side, Lufthansa Group issued this statement:
The Lufthansa Group enjoyed a continuing strong performance in its long-haul business in the first half of 2019, particularly on its key North American and Asian routes. On short-haul routes in Europe, the price war in Germany and Austria in particular had a negative impact on earnings.
โOur earnings are feeling the effects of tough competition in Europe and sizeable overcapacities, especially on our short-haul routes out of Germany and Austria,โ says Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. โWe are responding to this by further reducing our costs and increasing our flexibility. And with the turnaround plan which we recently presented, we also intend to make Eurowings a sustainably profitable airline.โ
In the second quarter, Group revenues rose by 4 percent to EUR 9.6 billion (prior-year period: EUR 9.3 billion). Adjusted EBIT amounted to EUR 754 million (prior-year period: EUR 1 billion). The adjusted EBIT margin for the second quarter was thus 7.8 percent (prior-year period: 10.8 percent). Fuel costs alone were EUR 255 million higher in the second quarter of 2019 than in the previous year.
Top Copyright Photo (all others by Lufthansa): Lufthansa – Fanhansa Boeing 747-830 D-ABYI (msn 37833) (Fanhansa – Siegerflieger – “Winnersflyer”) LAX (Michael B. Ing). Image: 926823.
As of summer 2018, Lufthansa Group passengers will be able to book a so-called Economy โLightโ 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:ย Lufthansa Boeing 747-830 D-ABYA (msn 37827) (Team D) IAD (Brian McDonough). Image: 941203.
The Verdi trade union called for a strike at Frankfurt, Munich, Cologne and Bremen airports on Tuesday, April 10, 2018. The ground handling services, the support services and also part of the airport fire brigade will be on strike between 5:00h and 18:00h. Due to this Verdi strike, Lufthansa is canceling 800 out of the 1,600 scheduled flights, including 58 long-haul flights on April 10. The cancellations will affect about 90,000 passengers. Flight operations are scheduled to resume normal services on Wednesday, April 11, 2018.
On inner-German routes, passengers can use the train, regardless of whether their flight has been cancelled. To do so, passengers can convert their ticket into a Deutsche Bahn ticket at โMy Bookingsโ on Lufthansa.com. It is not necessary to travel to the airport.
The airline continued;
Lufthansa cannot comprehend Verdiโs threat to carry out such a massive strike. “It is completely unacceptable for the union to impose this conflict on uninvolved passengers. Lufthansa is not a part of this collective bargaining conflict, but unfortunately our customers and our company are being affected by the consequences of this dispute,” says Bettina Volkens, Member of the Executive Board for Human Resources and Legal Affairs of Deutsche Lufthansa AG.
The nature and extent of the widespread and full-day strike is inappropriate and unreasonable at this time. Strikes must be the last resort in a wage dispute. “Politicians and legislators must define clear rules for strikes and industrial actions,” demands Volkens. “We regret that the travel plans of so many customers are being affected by this Verdi strike and we are working on minimizing the impact as much as possible”.
Copyright Photo:ย Lufthansa Boeing 747-830 D-ABYA (msn 37827) FRA (Marcelo F. De Bisi). Image: 940915.
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 Groupโs 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;
โOur 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,โ says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. โLast year we were able to reduce costs again, while at the same time becoming the first โ and the only โ 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.โ
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.
โWe are particularly pleased that we were again able to lower our passenger airlinesโ 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,โ adds Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. โExcluding these one-off effects, we reduced our unit costs by 1.8 percent.โ
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. โThese higher investments also reflect the increased size of our Group. But investments relative to revenue remain on one level with the worldโs most successful airlinesโ,โ comments Ulrik Svensson. โImportant 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.โ
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 attendantsโ 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.
โOn the basis of these very good results, we propose a dividend of EUR 0.80 per share to the Annual General Meeting,โ says Ulrik Svensson. โThis 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.โ
Network Airlines
The Groupโs Network Airlines โ Lufthansa, SWISS and Austrian Airlines โ 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 Airlinesย
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 Groupโs 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 Airlinesโ from 2019 onwards.
Aviation Services
The Groupโs 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 38ย million decline in its earnings for the year to EUR 66ย 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.
โWe will continue to consistently pursue our modernization,โ concludes Carsten Spohr. โAnd 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.โ
Copyright Photo:ย Lufthansa Boeing 747-830 D-ABYA (msn 37827) (Team D) IAD (Brian McDonough). Image: 941203.
Lufthansa released this statement on August 23, 2016:
The German Olympic team has returned home, landing on time at 11.10 a.m. local time at Frankfurt Airport with flight number LH 511. The Boeing 747-8 with the registration D-ABYK was specially branded in a custom โOlympia Siegerfliegerโ design. Around 250 athletes were on board, amongst them gold medal winners in beach volleyball Laura Ludwig and Kira Walkenhorst, double-gold canoeist Sebastian Brendel, the gymnasts who won bronze with Sophie Scheder and many others.
After landing at Frankfurt Airport and taking a photo of their arrival in front of the plane, the German athletes went with a police escort directly to Frankfurt downtown to Rรถmer Square, where they are welcomed by Federal President Joachim Gauck.
More than 50 international Olympic delegations use the services offered by the Lufthansa Group. The official Swiss Olympic delegation is also travelled back on Swiss flight LX 93 from Rio de Janeiro to Switzerland. The Boeing 777-300 ER was ceremoniously received at Zurich airport with a shower of water. Among the passengers the gold medallists in the lightweight menโs four rowing and the mountain biker Nico Schurter were on board.
Copyright Photo:ย Lufthansa Boeing 747-830 D-ABYK (msn 37835) (2016 Rio Olympics Team Aircraft – returning home) FRA (Bernhard Ross). Image: 934473.
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