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Lufthansa earnings nosedive on restructuring costs

, August 3, 2013, 0 Comments

German airline Lufthansa posted a net loss in the first half of 2013 as it seeks to become fitter for fiercely competitive aviation markets. Surprisingly, it still expects full-year profit to be higher than last year.

In the first six month of 2013, Lufthansa recorded a net loss of 204 million euros ($270 million) – down from a net profit of 50 million euros posted in the first half of 2012, according to an earnings report released by the German national carrier Friday.

Total revenues slipped 0.3 percent to 14.4 billion euros, the airline said, and so did the number of passengers, which fell to 49.5 million.

However, the company said it had increased its capacity utilization in the period as passenger numbers declined by 0.4 percent while the number of flights fell by 5.1 percent.

In addition, Lufthansa also claimed the loss between January and June was primarily the result of the airline’s cost-cutting drive, as well as of one-off effects.

Without those charges, the group’s operating profit would have been higher than in the first half of last year, said Lufthansa Chief Financial Officer (CFO) Simone Menne.

Lufthansa is currently undergoing major restructuring, shedding more than 3,500 jobs worldwide to save 1.5 billion euros by 2015. The program is needed as the airline struggles with competition from low-cost carriers, as well as facing rising fuel costs and airport fees.

“The restructuring of Lufthansa Group is gaining speed,” said CFO Simone Menne, adding that Lufthansa’s budget subsidiary Germanwings was well received by markets and was producing positive results. Low-fare carrier Germanwings is currently in the process of taking over all European and domestic German routes from its parent airline.

Despite the net loss in the first half of 2013, Lufthansa said it still anticipated full-year revenue to be up from last year, as well as an operating result higher than the 524 million euros the airline recorded in 2012.

Source: Deutsche Welle |