Lufthansa doubles full-year profit but maintains cautious outlook
Thursday March 13, 2008
Lufthansa reported a net profit of €1.66 billion for 2007, more than double the €803 million earned in the prior year, on a 13% rise in revenue to €22.42 billion, both records for the German airline group as results were boosted by a book gain of about €503 million from the sale of its shares in Thomas Cook.
Chairman and CEO Wolfgang Mayrhuber noted that the results were achieved despite high fuel prices, economic uncertainty and stiff competition. They include Swiss International Air Lines earnings for the second half of 2007, the first time those numbers have been incorporated into LH's full-year figures. LH said it achieved "cost and revenue synergies" with Swiss totaling €233 million. Traffic revenue was €17.6 billion, up 14.4%. The company attributed the revenue rise both to the effects of consolidation with Swiss and to growing passenger demand.
But consolidation also added to expenses, particularly in the areas of materials and personnel. Overall expenses rose 10.8% to €22.5 billion. Fuel costs were €3.9 billion, up 14.7%. Operating profit climbed 63.1% to €1.38 billion from €845 million.
Looking forward, LH projects "yet another improvement" in its profit in 2008, a year during which it will continue to evaluate cautiously a landscape altered by consolidation, open skies and increased competition.
Mayrhuber said the company is not in a hurry to open new long-haul routes from outside Germany once transatlantic open skies begins. "It is not our intention to fill open skies with new life without concern for the costs," he said, citing as an example the impending changes at Milan Malpensa, where Alitalia will be giving up slots. "We will look at this situation closely," he said, pointing out that flights from MXP to the US would require an LH feeder network into Milan. "In 2008 there will be no LH long-haul flights out of MXP," he said, contradicting press reports that it planned to base up to four widebodies at the airport.
The possibility of Lufthansa participating in European consolidation is greater, however, with Mayrhuber saying "there is a high possibility" that LH will acquire an airline this year. He said he could not comment on speculation that it might be interested in SAS's 20% stake in bmi, telling ATWOnline, "There is a commitment with the shareholders that we will not talk about it [publicly]." He said any acquisition would be "friendly" rather than hostile.
by Kurt Hofmann and Aaron Karp
ATWOnline
Thursday March 13, 2008
Lufthansa reported a net profit of €1.66 billion for 2007, more than double the €803 million earned in the prior year, on a 13% rise in revenue to €22.42 billion, both records for the German airline group as results were boosted by a book gain of about €503 million from the sale of its shares in Thomas Cook.
Chairman and CEO Wolfgang Mayrhuber noted that the results were achieved despite high fuel prices, economic uncertainty and stiff competition. They include Swiss International Air Lines earnings for the second half of 2007, the first time those numbers have been incorporated into LH's full-year figures. LH said it achieved "cost and revenue synergies" with Swiss totaling €233 million. Traffic revenue was €17.6 billion, up 14.4%. The company attributed the revenue rise both to the effects of consolidation with Swiss and to growing passenger demand.
But consolidation also added to expenses, particularly in the areas of materials and personnel. Overall expenses rose 10.8% to €22.5 billion. Fuel costs were €3.9 billion, up 14.7%. Operating profit climbed 63.1% to €1.38 billion from €845 million.
Looking forward, LH projects "yet another improvement" in its profit in 2008, a year during which it will continue to evaluate cautiously a landscape altered by consolidation, open skies and increased competition.
Mayrhuber said the company is not in a hurry to open new long-haul routes from outside Germany once transatlantic open skies begins. "It is not our intention to fill open skies with new life without concern for the costs," he said, citing as an example the impending changes at Milan Malpensa, where Alitalia will be giving up slots. "We will look at this situation closely," he said, pointing out that flights from MXP to the US would require an LH feeder network into Milan. "In 2008 there will be no LH long-haul flights out of MXP," he said, contradicting press reports that it planned to base up to four widebodies at the airport.
The possibility of Lufthansa participating in European consolidation is greater, however, with Mayrhuber saying "there is a high possibility" that LH will acquire an airline this year. He said he could not comment on speculation that it might be interested in SAS's 20% stake in bmi, telling ATWOnline, "There is a commitment with the shareholders that we will not talk about it [publicly]." He said any acquisition would be "friendly" rather than hostile.
by Kurt Hofmann and Aaron Karp
ATWOnline
