Lufthansa Group eyes strong summer demand as fuel prices bite | News

The Lufthansa Group’s overall results improved in the first quarter, although rising fuel costs dampened the recovery of its passenger airline business in the first three months of the year.

The German airline group posted an overall net loss of 584 million euros in the first quarter ($618 million), compared with a net loss of 1.05 billion euros in the same period a year ago.

While its overall adjusted EBIT improved by 44% to 591 million euros, the recovery of its passenger air transport division was slower, with losses narrowing to 1.14 billion euros from 1.36 billion euros a year ago. Lufthansa attributes this to rising fuel costs and low load factors at the start of the quarter.

However, the group says yields were “close to pre-crisis levels”, and passenger demand started to recover “strongly” in March. Its full-year outlook for an improvement in Adjusted EBIT remains unchanged.

“Restrictions on air traffic have been largely overcome,” said Lufthansa chief executive Carsten Spohr. “The last few weeks in particular have clearly shown how great people’s desire to travel is.”

The Lufthansa Group carried 13 million passengers in the first quarter, compared to 3 million in the first three months of 2021. It “significantly increased” its capacity towards the end of the quarter and says the average capacity was 57% of levels before the pandemic.

Bookings increased “sharply” towards the end of the first quarter, especially for flights to the United States, South America and Mediterranean destinations. The group plans to operate 75% of pre-pandemic capacity in the second quarter, increasing to 95% and 85% on European short-haul and transatlantic routes, respectively.

Group-wide revenue more than doubled to €5.36 billion in the first three months of 2022. Passenger airline revenue increased to €3.02 billion euros, compared to 961 million euros the previous year. The biggest improvement in Adjusted EBIT was recorded at Swiss, where this loss narrowed to €62 million from €211 million a year ago. Lufthansa announces that it will end the stabilization measures in Switzerland earlier than planned in the second quarter.

Rising profits from its freight and MRO units contributed to the group’s improved performance in the first quarter. Lufthansa reported a 57% improvement in its cargo division’s adjusted EBIT profit to 495 million euros, thanks to continued strong demand for air cargo amid disrupted global supply chains.

Lufthansa Technik’s adjusted EBIT profit also improved, from 45 million euros a year ago to 120 million euros, but the figure for its catering division worsened to a loss of 14 million euros against a loss of 8 million euros a year earlier. LSG faced a “difficult” market environment in the first quarter, which was made worse by the absence of government support measures in the United States, Lufthansa explains.

The Lufthansa Group ended the period with 9.9 billion euros of available cash, compared to 9.4 billion euros at the end of 2021.

“Demand has picked up faster and stronger than expected in recent weeks,” said Lufthansa chief financial officer Remco Steenbergen. “The current level of bookings gives us confidence that our financial results will continue to improve in the coming quarters.”

However, he warns that Lufthansa “must pass the rising costs on to customers”.

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