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Lufthansa Narrows Losses in First Quarter, But It’s Still Losing

May 06, 2014 10:00 am

Skift Take

It’s great to have some extra profit from a maintenance facility, but you don’t want to see dropping passenger numbers, too.

— Jason Clampet

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Fabrizio Bensch  / Reuters

A passenger walks past a ticket counter of German air carrier Lufthansa at Berlin Tegel airport April 2, 2014. The union for Lufthansa pilots, Vereinigung Cockpit, called a strike for its members to demand higher wages and the airline had to cancel more than 3,800 flights. Fabrizio Bensch / Reuters


Deutsche Lufthansa narrowed its first-quarter loss as measures to cut costs and improve efficiency took hold.

The operating loss fell to 245 million euros ($340 million) from 359 million euros a year earlier, partly helped by a profit at the maintenance subsidiary, Europe’s second-largest carrier said in a statement today. Sales fell 2.5 percent to 6.46 billion euros, while the net loss narrowed by 45 percent to 252 million euros.

“We have improved our cost structures and have taken various actions to enhance the quality of our revenues. And we will continue with our efforts to further raise our efficiency,” Chief Financial Officer Simone Menne said in the statement.

Chief Executive Officer Carsten Spohr, who took over last week, must complete the company’s most ambitious efficiency program designed to lift operating profit to 2.65 billion euros by the end of next year, while drafting a strategy to fend off low-cost competitors in Europe and Middle East carriers.

Lufthansa today reiterated operating profit this year will rise to between 1.3 billion euros and 1.5 billion euros, and the company targets 2.65 billion euros next year. Analysts expect the measure at 1.41 billion euros this year, rising to 2.13 billion euros next, estimates collected by Bloomberg show.

The average analyst estimate was for an operating loss of 283.4 million euros in the first quarter, and a net loss of 333 million euros, data collected by Bloomberg show.

Unit costs at the passenger business declined by 3.7 percent in the quarter, Lufthansa said, while pricing as measured by average yields declined by about 1 percent.

Fuel costs this year will amount to 6.7 billion euros, compared with a March forecast for 6.8 billion euros.

While Lufthansa is currently negotiating with its pilots about retirement benefits, the company can’t exclude further walkouts, the CFO said.

Air France KLM Group on April 30 said its first-quarter loss narrowed as its fuel bill dropped. Sales dropped 2.2 percent in a “tough” operating environment.

International Consolidated Airlines Group SA will publish first-quarter earnings May 9.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net. 

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