- Strongest revenue quarter in the company’s history, with revenue of 10.7 billion euros
- Unit revenues stabilize compared to the first half of the year thanks to high seat load factor
- Lufthansa Technik at previous year’s record level, significant earnings improvement at Lufthansa Cargo
- Demand remains high, bookings for Q4 up compared to last year
- Full year guidance confirmed at 1.4–1.8 billion euros Adjusted EBIT
Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG:
“Today, we are reporting on another strong summer travel season, with a record seat load factor of 88 percent in August. Particularly in view of the fact that global air traffic again reached its capacity limits this summer, I would like to thank our employees for their efforts and our customers for the patience we sometimes had to ask for.
Global demand remains intact and bookings for the fourth quarter are also at a high level compared to the previous year, particularly in the premium classes.
With all passenger airlines operating at a profit, Eurowings, Austrian Airlines and Brussels Airlines even generated record results in the third quarter. Lufthansa Technik and Lufthansa Cargo also remain on track.
At the same time, delayed aircraft deliveries, punctuality issues at our hubs in Germany and regulatory disadvantages are impacting our core brand. Lufthansa Airlines has therefore launched the “Turnaround” program to address these and structural internal challenges.
Across the group, we are continuing to invest in the largest fleet modernization in our history, in premium offers for our guests and in an even more international positioning. These three central pillars of our strategy will enable us to further expand our role as the leading airline group in Europe.”
Results
The Group increased its revenue by five percent year-on-year to 10.7 billion euros (previous year: 10.3 billion euros) in the third quarter due to the higher number of flights and the revenue growth at Lufthansa Technik. This was the strongest quarter in terms of revenue in the history of the Lufthansa Group. The Group generated an operating profit (Adjusted EBIT) of 1.3 billion euros (previous year: 1.5 billion euros), resulting in an operating margin of 12.5 percent (previous year: 14.3 percent). The year-on-year decline was due to significant cost increases, particularly in fees, MRO expenses and personnel. Net profit fell to 1.1 billion euros (previous year: 1.2 billion euros).
Lufthansa Group Passenger Airlines expand capacity
The Lufthansa Group airlines welcomed more than 40 million guests on board their aircraft in the third quarter, an increase of six percent over the previous year. At 94 percent of available capacity (prior-year period: 88 percent), the seat load factor rose to 87 percent in the third quarter (previous year: 86 percent). In terms of the seat load factor, August was the strongest month in the company’s history, with a load factor of 88 percent.
Due to the industry-wide capacity growth, average yields fell by 3.5 percent compared to the previous year, although the development in the various traffic regions was mixed: While average yields in continental traffic in the third quarter remained almost at the previous year’s level (-0.4 percent), they fell significantly by 14 percent in the Asia/Pacific region. Due to the improved passenger load factor, the decline in unit revenues (RASK) was less pronounced at minus 2.7 percent. Unit costs increased by 4.5 percent compared to the previous year due to higher fees, as well as higher material and personnel costs.
Overall, the Group’s passenger airlines generated an Adjusted EBIT of 1.2 billion euros in the third quarter (previous year: 1.4 billion euros). The decline in the operating profit of the passenger airlines is mainly driven by the 234 million euros decline in the result of Lufthansa Airlines. Delays in the delivery of new aircraft and the associated need to continue operating older aircraft, increased location costs, higher staff costs and expenses for compensation payments following flight irregularities had an above-average impact on the result of Lufthansa Airlines.
Turnaround program at Lufthansa Airlines is making progress
Lufthansa Airlines is consistently implementing its Turnaround program. The aim is to increase efficiency, reduce complexity and improve product quality, thereby making the airline fit for the future. Among other things, the Turnaround plan envisages shifting more short-haul traffic to more cost-efficient flight operations. Further efficiency gains are to be achieved by optimizing the network and increasing flexibility and automation. By 2026, the measures will have a gross EBIT effect of around 1.5 billion euros.
Till Streichert, Chief Financial Officer of Deutsche Lufthansa AG:
“The Lufthansa Group will continue to focus on generating cash flow and creating value for our shareholders. For this, the Turnaround program at Lufthansa Airlines and the fleet modernization are core elements. I am confident that on this basis we will position all our passenger airlines to be sustainably efficient and profitable.”
Lufthansa Technik’s result on par with last year, positive performance at Lufthansa Cargo
In the third quarter, Lufthansa Technik continued to benefit from the high demand for air travel and the associated increase in demand from airlines worldwide for maintenance and repair services. Lufthansa Technik generated an Adjusted EBIT of 167 million euros in the third quarter (previous year: 168 million euros).
The airfreight business continued to recover in the third quarter compared with the previous quarter. Lufthansa Cargo achieved an operating profit of 38 million euros (previous year: 1 million euros) in the traditionally seasonally weak third quarter for air freight. This trend confirms the anticipated normalization in the air freight market. Furthermore, Lufthansa Cargo is optimally positioned to benefit from strong e-commerce business with Asia, which has prompted Lufthansa Cargo to shift capacity from the transatlantic to the Asia/Pacific region.
Adjusted free cash flow clearly positive, balance sheet further strengthened
The Lufthansa Group generated an operating cash flow of 635 million euros in the third quarter of 2020 (previous year: 1.2 billion euros). After deducting net capital expenditure, primarily for new fuel-efficient aircraft, the Group recorded an Adjusted free cash flow of 128 million euros in the quarter. In the first nine months, the Adjusted free cash flow was 1.0 billion euros (previous year: 1.7 billion euros).
The Group continued to strengthen its balance sheet during the first nine months of the year, supported by the positive cash flow. At 5.1 billion euros, net debt was below the year-end level 2023 (December 31, 2023: 5.7 billion euros). Net pension liabilities decreased to 2.6 billion euros (December 31, 2023: 2.7 billion euros). Compared to the beginning of the year, available liquidity increased by around 1 billion euros to 11.4 billion euros and was therefore well above the target range of 8-10 billion euros as of the reporting date.
Outlook
The Lufthansa Group expects demand for air travel to remain strong in the remaining months of the year. The load factors booked for November and December are well above the levels observed at the same time last year. Demand remains particularly high in the premium classes, i.e. Business Class and First Class.
The Lufthansa Group plans to increase its capacity in the fourth quarter further compared to the previous year. For the full year 2024, it expects a capacity of around 91 percent compared to the pre-crisis level.
The Group also expects to report a positive operating result in the fourth quarter. Overall, the Lufthansa Group is therefore confirming its expectation of achieving an Adjusted EBIT of 1.4 to 1.8 billion euros for the full year.
