Tuesday 24 April 2018

Lufthansa flies into best ever results

Lufthansa airplanes stand on the tarmac at the Frankfurt am Main airport, Germany (Stock)
Lufthansa airplanes stand on the tarmac at the Frankfurt am Main airport, Germany (Stock)
Ellie Donnelly

Ellie Donnelly

Lufthansa Group, Germany’s largest airline, recorded earnings before interest and tax of €3.3bn for 2017, a massive 45pc increase on its 2016 performance, and the company’s best result in history.

The strong increase in earnings included the positive €582m one-off effect from a collective labour agreement with the pilots union of Lufthansa, Lufthansa Cargo and Germanwings, which was recognised in the income statement in December, the company said.

Revenues for the year at the group increased 12.4pc year-on-year to €35.6bn, with the company citing the performance of the group’s airlines as a whole for the strong performance, according to financial statements from the group released today.

"Our endeavours of the past few years are paying off," Carsten Spohr, chairman and chief executive of Deutsche Lufthansa, said.

"Our modernisation 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."

During the year the group invested approximately €3bn, around a third more than in the previous year. This is partly due to investments of some €900m 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’," Ulrik Svensson, chief financial officer at Lufthansa, said.

"Important is that the return on capital continues to increase. In 2017, our adjusted return on capital employed (after tax) improved by 4.6 percentage points to 11.6pc."

Network Airlines

The group’s network airlines – Lufthansa, SWISS and Austrian Airlines – increased their adjusted earnings before interest and tax by nearly 50pc to some €2.3bn. With strong demand and a positive pricing environment, the network airlines raised their earnings margin 2.6 percentage points to almost 10pc, the airline said.

Outlook

Looking to the rest of 2018, the group said it expects that €700m in higher fuel costs could be offset by an improved operating performance, so that for 2018 in total adjusted earnings before interest and tax would only be slightly below 2017.

In addition, organic capacity is expected to increase by around 7pc, as unit revenues excluding currency factors should remain broadly stable, the company said.

Unit costs excluding fuel and currency factors should be further reduced by 1 to 2pc Lufthansa said today.

"From a position of strength, we will continue to drive consolidation in Europe," Mr Spohr said.

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