Lufthansa reports €1bn half-year profit

Lufthansa reports €1bn half-year profit

Lufthansa reported a record number of passengers and flights in the first half of 2018, with a €1-billion operating profit “just below” the record level of last year “despite substantially higher fuel costs”.

The Lufthansa Group airlines carried 67 million passengers in the six months. Half-year traffic revenue rose 7% year on year to €13.2 billion and group revenue was up 5% to €16.9 billion.

Reported revenues at network carriers Lufthansa, SWISS and Austrian Airlines fell 3.9% year on year under new accounting standard IFRS 15. However, excluding the accounting change, revenue rose 3.2% at the carriers.

Lufthansa noted “higher load factors and improved yields, with North Atlantic and European routes seeing particularly strong demand”.

Operating profit across the three airlines rose almost 26% to €951 million, resulting in an operating margin of 8.9% – more than two percentage points up year on year.

German carrier Lufthansa made an operating profit of €660 million in the first six months, up 16% on 2017.

SWISS recorded a 57% increase in operating profit to €293 million. But Austrian Airlines lost €3 million in the half year, and low-cost subsidiary Eurowings made an operating loss of €199 million despite a 9.2% increase in half-year revenues to €1.9 billion.

Lufthansa blamed the “depressed earnings” on the expense of integrating former Air Berlin aircraft into the Eurowings fleet.

Group chief financial officer Ulrik Svensson said: “The prime features in the first half were strong growth and improvement in our unit revenues.

“We were able to more than offset the added burden imposed by higher fuel costs.”

The group also noted an increase in costs due to delays and cancellations caused by “strike action and the infrastructure inadequacies of Europe’s aviation systems”.

Lufthansa reported full-year capacity would be 8% up on 2017 and fuel costs €850 million higher.

But Svensson said: “We are confident we will be able to report solid revenue trends for the second half of 2018.”

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