Lufthansa Group raises profit guidance but warns of €1 billion cuts in 2016

Lufthansa Group raises profit guidance but warns of €1 billion cuts in 2016

Lufthansa Group today raised its profits forecast by saying it is now on course for “significantly improved” full-year results.

The German airline organisation upgraded its annual profit expectation from €1.75 billion to €1.95 billion, helped by a drop in fuel prices.

This came as adjusted earnings for the first nine months of the year soared by 71% to €1.7 billion with low-cost offshoot Germanwings breaking even following the crash of flight 9525 in March which killed all 144 passengers and six crew.

“The significant earnings improvement is mainly attributable to strong summer business at the group’s passenger airlines and continuing low oil prices,” Lufthansa said.

But cost cuts of €1 billion have been identified for 2016, revealed chairman and chief executive, Carsten Spohr.

“We cannot expect to fly for too long with a tailwind of low oil prices. So we must continue to work hard on the competitiveness of our cost structures,” he warned.

“And here we have already identified cost savings of around €1 billion for 2016. We are making good progress at all levels in securing the Lufthansa Group’s future, and our new group alignment is now clearly taking shape.

“The establishment and operational start of our point-to-point carrier Eurowings is fully on track.

“We now need to make our German hub airline capable of further growth, together with our social partners, to give our core business, too, additional aircraft and new prospects and perspectives again in the interests of all our employees there.

“Our aim here is not to have to further adjust our network to our costs, but to give ourselves a competitive cost structure that will enable us to once again open up new routes and tap new markets.”

Reflecting on the improved performance so far this year, Spohr said: “We are delighted to be able to present these encouraging results, which confirm that we are on the right track, and that our chosen strategy is having its desired effect.

“The realignment of the Lufthansa Group is now being reflected in good results, too.

“There is no question that the low oil price helped us to achieve these. But our improved earnings rest on more than this alone.

“We recorded outstanding passenger volumes this summer and significantly improved load factors, too.

“In the third-quarter we completed the most comprehensive product and service upgrade in the history of our company, and our guests are clearly honouring our enhanced quality levels.

“The strong development at our airlines is closely linked to the enhancements we have made to our products and services.

“At the same time, Germanwings has not just reached break-even, but clearly exceeded this target.

“We have also made ourselves more efficient, not least through our rigorous capacity discipline: We have deliberately refrained from further growth, and currently have 25 fewer aircraft in service than we planned to have at this time back in 2012.”

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