Lufthansa: Crisis in the industry burdens economic result
Lufthansa has posted an operating profit of eight million euros for the first six months of 2009. The Group has therefore not been able to match the good results of the previous years during the current business year. The causes for the decline in earnings lie in the economy-related weaker demand and the altered travel behaviour of the passengers.
Business travellers in particular, have increasingly been buying tickets in the cheaper booking classes, leading to a significant slide in average yields during the first half of the year. “Lufthansa has made provisions and is holding its course against the competition in highly challenging conditions. This is a strong performance by all of the employees in the Group; however, we still cannot be satisfied with this result”, commented Member of the Executive Board of Deutsche Lufthansa AG and Chief Financial Officer Stephan Gemkow, speaking at the presentation of the first-half results.
Chairman of the Executive Board and Chief Executive Officer of Deutsche Lufthansa AG Wolfgang Mayrhuber commented on the economic developments in the Group’s individual business segments saying: “The figures speak for themselves. Crises ruthlessly reveal the weak points and we shall act. It is only sustainable structures that will allow our company to match its past successes and succeed against the competition in the long-term.” During the first half of 2009, the Passenger Airline Group in particular had to deal with the economy-related decline in demand and achieved significantly lower traffic revenues. The operating result was therefore below the figure for the previous year. In response to the negative trend in its core business segment, Lufthansa has launched “CLIMB 2011”, a program to safeguard the earnings of Lufthansa Passenger Airlines.
The aim is the sustainable improvement of the result for Lufthansa Passenger Airlines by one billion euros by the end of 2011; thereby, the focus will lie on cutting costs. According to Gemkow, the measures of the program would be elaborated and implemented during the upcoming weeks. The Logistics business segment also showed a significant slump in revenue and loss in the operating result during the first six months of the year, and consequently intensified the measures to safeguard earnings. Among others, the measures included the reduction of cargo capacity by 30 per cent and the increase of short-time work to 25 per cent in the business segment during the second quarter. MRO was the only business segment to record an increase in revenue despite the highly challenging conditions. However, the operating result was lower than in the same period the previous year: This was mainly due to increasing price pressure, reserves for bad debt and foreign exchange losses due to the record date effect in inventory valuation. The measures to safeguard earnings were also intensified in the IT-Services business segment. Lowering the number of external staff by half, time off in lieu and reducing the administrative costs by 30 per cent are all measures aimed at counteracting the slump in revenue and the operating result. Revenue and profits also slumped in the Catering business segment. The “Performance 2009“ and “Upgradeplus” programs aim to secure an operating profit for the current business year and ensure the set up of a sustainably competitive company structure.