Profit at Germany’s Lufthansa dips as it digests Air Berlin

GERMAN airline giant Lufthansa on Tuesday said the absorption of Air Berlin weighed on profits in the second quarter, but strong passenger numbers helped to keep the group’s full-year targets on track.

The group booked a net profit of € 734 million ($860 million) between April and June, down 0.8 per cent compared year-on-year but better than analysts had predicted.

Its adjusted pre-tax profits dipped 3.4 per cent to $982 million, while revenues inched up 0.4 per cent to $ 10.8 billion.

Lufthansa said higher than expected “one-off” costs related to the integration of parts of former rival Air Berlin into low-cost carrier Eurowings had “depressed” earnings, and would continue to weigh on the bottom line in the third quarter.

High fuel costs as well as delays and cancellations caused by unusually stormy weather also had “a negative impact” but were largely offset by rising passenger numbers and a cost-cutting drive, the group said in a statement.

“Without the integration costs at Eurowings, which we willingly accepted to further strengthen our market position in Europe, the group’s result would have grown,” said chief financial officer Ulrik Svensson.

The acquisition of many of Air Berlin’s aircraft and staff following its insolvency last year will see no-frills Eurowings grow its fleet to around 210 aircraft by 2019, stepping up competition with budget rivals like EasyJet and Ryanair.

The Lufthansa group – which includes Swiss, Brussels and Austrian Airlines – is also eyeing a chunk of struggling Alitalia’s fleet, as a wave of consolidation in the aviation industry shows no signs of abating.