Lufthansa Group profits up in 2015, but cargo weak

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The Lufthansa Group increased profit significantly in 2015 and generated revenues of 32.1 billion euros – a 6.8 per cent rise.

The Adjusted EBIT, the leading indicator of economic success, increased by 55 per cent to 1.8 billion euros and the result sits within the forecast range defined last October, and includes the 100 million euros earnings impact as a result of strikes in the fourth quarter.

With the exception of Lufthansa Cargo, all business segments contributed to the significant earnings improvement. The Adjusted EBIT for the Group’s passenger airlines more than doubled, and the two biggest service companies, Lufthansa Technik and LSG SkyChefs, both posted double-digit percentage earnings growth.

The Lufthansa Group says it further improved its financial stability in 2015. The year-end equity ratio stood at 18 per cent. Liquidity increased, net indebtedness declined, free cash flow increased significantly to more than 800 million euros and Deutsche Lufthansa AG’s ratings were confirmed.

Lufthansa chairman of the executive board and chief executive officer, Carsten Spohr says: “With the Germanwings tragedy, 2015 was an emotionally very challenging year for the Lufthansa Group. The numerous strikes were a further burden. Nevertheless, we continued to successfully work on our Group’s future viability. And our strategic realignment is progressing well.”

“2015 was a good year in economic terms,” Spohr continues. “The doubling in the passenger airlines’ result is not only due to lower fuel costs, but also to the favorable developments in our passenger volumes and to our capacity discipline.

“The result also confirms that our focus on quality in both the premium and the point-to-point segment is the right approach. And the very good results from Lufthansa Technik and LSG Sky Chefs further affirm that the Lufthansa Group is on the right track.

“For 2016 we are aiming to increase our result for the Lufthansa Group again,” Spohr adds. “We aim to enhance the profitability of our hub airlines by further modernising their fleets and further increasing efficiency.

“We will only grow capacity where our cost structures are competitive. We will expand Eurowings substantially and enlarge the route network. We will foster innovations in all business areas and make travel for our customers even more pleasant and simpler through digitalisation and corresponding new offers.”

Lufthansa says cargo was weaker and the earnings contribution of Lufthansa Cargo declined 40 per cent to 74 million euros.

“The airfreight market had seen sizeable overcapacities from the beginning of the 2015 summer flight plan onwards, with a correspondingly negative impact on Lufthansa Cargo’s load factors and yields.

“Cargo earnings were also depressed by the strike actions at Lufthansa Passenger Airlines in the important fourth-quarter period,” Lufthansa explains.

The Lufthansa Group expects to again slightly improve in 2016: “We will not be unduly influenced by the current low fuel costs,” says chief financial officer, Simone Menne. “They will provide a welcome tailwind for our 2016 results, too; but cost discipline remains one of our paramount tasks. We must lower the unit costs at our hub airlines. This is and remains the key to maintain our competitiveness.”

One major driver in this respect will be the further enhancements to the efficiency of the aircraft fleet: this year alone, the Lufthansa Group will take delivery of 52 new, state-of-the-arts and fuel-efficient aircraft.