Lufthansa reports 17-fold increase in profits as traffic soars
Lufthansa, Europe's second-largest carrier, reported a 17-fold increase in nine-month profit on a recovery in intercontinental passenger and cargo traffic, and raised its full-year forecast.
Net income reached €524m, compared with €31m a year earlier, it said yesterday, without breaking out the third quarter. Sales rose 25pc to €20.2bn. Lufthansa said 2010 operating profits would exceed €800m, or 49pc more than the average estimate of eight analysts compiled by Bloomberg.
International passenger traffic in Europe, the region where recovery has been slowest, grew 8.4pc last month, almost catching up with Asia, industry data show.
Cologne-based Lufthansa wants to lower annual costs at its passenger division by €1bn through 2011 and is working to return the Austrian Airlines and British Midland units to profit.
"They have exceeded the already-high expectations in the market and remain optimistic for the next quarter," said Frank Skodzik, an analyst at Commerzbank in Frankfurt.
"The market environment is very strong, especially with an upswing in long-distance traffic and a return of premium travel."
Lufthansa rose 1.9pc to €15.43 at close of trading in Frankfurt yesterday, the highest level in almost two-and-a-half years. Air France-KLM Group, which had also raised its forecast, gained 2pc in Paris.
The German carrier had said on July 29 that its 2010 operating profit would exceed last year's €130m, without giving a figure.
Last month, Lufthansa's passenger traffic rose 7.9pc to 8.65 million, while Air France gained 1.5pc and BA added 4.3pc.
The International Air Transport Association last month tripled its projection for 2010 airline profit to $8.9bn (€6.5bn) globally as travel increases.
"The nine-month earnings reflect both the measures undertaken in the group to reduce costs and the gratifying pace of demand in the third quarter, particularly in the freight and intercontinental passenger businesses," Lufthansa said in the statement.
Along with Air France and British Airways, Lufthansa faces increasing pressure on fares from low-cost carriers including Dublin-based Ryanair.
The network carriers this month called on the European Union to change regulations that help expansions by Gulf airlines such as Emirates, which they said may threaten Europe's status as an air-travel hub.