Austrian becomes a problem for Lufthansa – the lightning analysis

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Frankfurt Europe's largest aviation company Lufthansa has submitted its business figures for the first nine months on Thursday morning. These are the main results:

  • Of the sales increased slightly by three percent 27.7 billion euros to.
  • Adjusted for special effects Operating earnings before interest and taxes (EBIT) fell by 30 percent in the first three quarters of the year 1.7 billion euros, This trend had already begun in the second quarter. One cause is the increase in fuel costs by 620 million euros.
  • Of the Group profit amounted to a good billion euros, after 1.8 billion in the previous year.
  • The Austrian subsidiary Austrian Airlines could not stop the downward trend in the first half of the year. Adjusted operating profit (EBIT) slipped from € 110 million to only € 17 million.

This is positive

Strategy of abstention pays off: After a surprisingly high loss for many investors in the first quarter and a short-term profit warning for the entire year, Lufthansa's management had revised its own plans. To fulfill at least these, for example, the capacity was planned very carefully.

An expansion of the so-called offered seat kilometers by 3.8 percent in the first nine months was offset by an increase of 4.7 percent in terms of seat kilometers sold. In other words, the increase in demand was greater than the increase in supply.

On balance, this ensured better utilization of the aircraft. The accumulated in the first three quarters cumulatively at 82.8 percent, an increase of 0.7 percentage points. A higher utilization in turn pays to the result.

At the same time, the Group is moving forward to cut costs and increase productivity in flight operations. Adjusted for currency effects and fuel costs, unit costs for the premium airlines Lufthansa, Swiss and Austrian fell by 0.8 percent in the first nine months. In the third quarter, this cost ratio even fell by 2.1 percent.

Also positive is the development of the former problem child Eurowings. There, adjusted operating profit in the third quarter rose by 39 percent to 169 million euros. Thus, the downward trend of the first half of the year could be turned. In addition, once again shows how valuable the maintenance subsidiary Lufthansa Technik is. It increased its operating profit in the first nine months by ten percent to 337 million euros.

This is negative

Success in lowering costs is consumed again: The general conditions in air traffic have hardly improved after nine months. The competition is still tough, prices are under pressure. This is not changed by the fact that the average prices for cheap tickets have recently risen again slightly, as the German Aerospace Center recently calculated.

For example, unit sales adjusted for currency effects and fuel expenses – the equivalent of unit costs – fell by 2.8 percent in the first nine months. The airlines take less per passenger.

The result: despite all the internal measures, the earnings margin based on the EBIT for the premium airlines fell in the first three quarters from 12.1 to nine percent. The example of Austrian shows how much the Lufthansa Group is under pressure. Austrian is a premium airline, but at the hub in Vienna has to face a recent increasing competition with low-cost carriers such as Ryanair or Easyjet put.

Therefore, the airline should now focus on the flights in Vienna. The decentralized locations are closed, the fleet on the airbus A320 family harmonized. By the end of 2021, costs will have to be reduced by 90 million euros a year. The job cuts are also on the agenda.

The cargo subsidiary Lufthansa Cargo, on the other hand, is feeling the economic weakness in Asia. Operating income fell from € 162 million to € 33 million between January and the end of September.

How it goes on

Lufthansa reaffirms its revised annual target at the beginning of the year. Thereafter, sales are expected to grow in the low single-digit percentage range. The adjusted EBIT margin should be between 5.5 and 6.5 percent, which would mean an operating profit of between two and 2.4 billion euros. The question is, however, whether and to what extent the long-term dispute with the cabin union UFO Europe's largest airline still hail the balance sheet.

Lufthansa had to cancel 1300 flights due to a strike on Thursday and Friday. That costs and is at the expense of the profit. The difficult-to-solve wage dispute could become a further burdening factor for the company by the end of the year.

More: Until 9 o'clock were canceled at the largest German airport 40 flights. Lufthansa had canceled about 1300 flights because of the strike until Friday.

(t) Lufthansa (t) Austrian (t) Airline (t) Turnover (t) Profit (t) Balance Sheet (t) Rationalization and Restoration (t) Austrian Airlines (t) Ryanair (t) Eurowings (t) Easyjet (t ) Airbus (t) Aviation (t) airlines (t) airlines

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