The Lufthansa Group remains confident of achieving its profit targets for 2014 – despite experiencing a difficult third quarter, and despite strike action eroding EUR 170 million from its earnings results. The Group expects to post an operating profit of around EUR 1 billion for the year, excluding the impact of any further strike action between now and year-end. The projection has been strengthened by favorable results for the first nine months: the Lufthansa Group achieved an operating profit of around EUR 849 million for January-to-September 2014, a EUR 186 million improvement on the same period last year. Adjusted for non-recurring restructuring and project costs, this represents an operating profit of some EUR 1 billion for the first-nine-month period. Third-quarter operating profit amounted to EUR 735 million, up EUR 145 million on the prior-year period.
Business segment results
The Passenger Airline Group achieved an operating profit of EUR 473 million (down EUR 41 million) for the January-to-September period. Lufthansa German Airlines contributed EUR 260 million (down EUR 56 million) to this, with its still-profitable European operations also playing their part. Germanwings, which will take over Lufthansa’s last remaining European point-to-point service – Düsseldorf-Zurich – on 8 January, also remains confident of posting an operating profit for 2015. Lufthansa’s year-on-year operating profit decline is attributable to falling yields and to the financial damage caused by the pilots’ strikes. To enhance profitability, the Lufthansa Group currently envisages a fleet modernization that will keep its aircraft numbers broadly at their present level in 2015. SWISS achieved a nine-month operating profit of EUR 217 million (up EUR 35 million). Austrian Airlines reported an operating loss of EUR 7 million (down EUR 26 million). The year-on-year decline here is also connected with the costs of the planned new collective labor agreement for Austrian’s ground and flying personnel, which, while entailing extra expense, will also give the company more positive longer-term prospects and perspectives. The Group’s airlines all benefited substantially from the revised groupwide depreciation policy, which added an aggregate EUR 260 million to their operating results for the first nine months of the year.
Lufthansa Technik achieved a sizeable EUR 335 million operating profit (up EUR 3 million), LSG SkyChefs reported a profit of EUR 66 million (up EUR 3 million) and Lufthansa Systems posted a profit of EUR 21 million (up EUR 4 million). The Logistics business segment also raised its nine-month operating profit EUR 6 million to EUR 51 million, not least through the absence this year of the factors which had depressed its 2013 results.
The first nine months in figures
The Lufthansa Group’s total revenue for the first nine months of 2014 amounted to EUR 22.6 billion, a 0.6% decline on the same period last year. Total operating income also declined 0.6%, to EUR 24.2 billion. At the same time, total operating expenditure for the first nine months was reduced by a more substantial 1.9% to EUR 23.3 billion. Fuel costs for the period declined by EUR 269 million or 4.9% to EUR 5.2 billion. The figure includes a EUR 53 million loss from fuel price hedging activities. Fees and charges were 1.4% above their prior-year level.
The Lufthansa Group achieved an operating profit of EUR 849 million for the first nine months of 2014. The net result for the period amounted to EUR 482 million, a EUR 235 million improvement on the same period last year. Nine-month earnings per share rose from the EUR 0.54 of 2013 to EUR 1.05.
The Lufthansa Group increased its investments in modernizing and maintaining its aircraft fleet to EUR 1.9 billion in the first-nine-month period. All in all, the Group invested EUR 2.2 billion, some EUR 339 million more than in the same period last year. Cash flow from operating activities totaled EUR 2.1 billion, while free cash flow (operating cash flow less net capital expenditure) amounted to EUR 229 million. Net debt stood at EUR 2.3 billion at the end of the third-quarter period, up EUR 567 million on its level at the end of 2013. The balance sheet equity ratio amounted to 15.2%, down 5.8 percentage points from the end of last year.