Lufthansa profit rises amid strike concerns
FRANKFURT: German airline Lufthansa reported a rise in quarterly net profit yesterday and confirmed its full-year outlook, even as higher fuel costs added to a “challenging market environment”.
On the same day that it faced a major cabin crew strike in Germany, the carrier announced a net profit of €1.15 billion ($1.27 billion) between July and September, up 4% year-on-year.
But the jump was mainly thanks to accounting effects, with the group’s operating profit adjusted for some one-off items, actually falling 8% to €1.3 billion.
Lufthansa — which includes Brussels, Swiss and Austrian Airlines — said it had faced higher than expected fuel costs that were only partially offset by cost-cutting efforts.
And like rival airlines it was grappling with “a general slowdown in the global economy”, it said in a statement.
Revenues for the period were up 2% to €10.2 billion.
“In an increasingly challenging market environment, it is more vital than ever that we consistently take every action within our influence and further reduce our costs,” said chief financial officer Ulrik Svensson.
The group announced new measures at its Austrian Airlines subsidiary, saying it aimed to achieve additional savings of €90 million a year by the end of 2021 through a renewed focus on the Vienna hub, aircraft replacements and lower personnel costs.
Job losses could not be ruled out, a Lufthansa official told reporters in a conference call.
Lufthansa said it was on track to meet its 2019 goals, expecting adjusted earnings before tax and interest of €2-2.4 billon while revenues were predicted “to rise by a single-digit percentage amount”.
But it lowered its earnings outlook for
Lufthansa Cargo, blaming “current weak market demand”.
The group’s total fuel costs for the year were expected to reach €6.8 billion, €650 million more than in 2018.
Due to the strike, Lufthansa said it expected to cancel a total of 1,300 connections yesterday and today, with 180,000 passengers affected.
That amounts to about one in five of Lufthansa’s planned 6,000 flights over the two-day period.
A Lufthansa spokesman confirmed about 400 flights would be cancellled in Frankfurt alone yesterday, with an additional 250 in Munich and some more at smaller airports, bringing the total number to 700.
“It’s quiet in the terminals,” a spokeswoman for Frankfurt airport said, adding that many passengers had rebooked onto different flights and not shown up at the airport.
Flight attendants’ union UFO has left open the possibility of continuing the strikes beyond today, potentially escalating the dispute.
The airline and the union have been at odds for months over the union’s legal status.