Lufhtansa Group generates operating profit of 1.1 billion euros in the third quarter

posted on 27th October 2022 by Eddie Saunders
Lufhtansa Group generates operating profit of 1.1 billion euros in the third quarter

Carsten Spohr, CEO of Deutsche Lufthansa AG, said:
“The Lufthansa Group achieved a very strong result in the third quarter with an operating profit of over one billion euros, thus demonstrating its regained profitability.

“All business segments, passenger airlines as well as logistics and MRO, contributed to this success.

“This once again underlines the strength of our portfolio. The Lufthansa Group has economically left the pandemic behind and is looking optimistically into the future.

“After all, the desire to travel and thus the demand for air travel continues unabated. Now we are focusing on the future and launching the biggest product renewal in our history.

“We are investing in 200 new aircraft and offering perspectives for our employees around the world.

“It remains our ambition to further strengthen our position among the top 5 airline groups in the world.”

Results
Group revenue almost doubled compared to last year (+93 percent), reaching 10.1 billion euros in the third quarter (previous year: 5.2 billion euros).

The company generated an Adjusted EBIT of 1.1 billion euros in the third quarter of 2022, including an impact from strikes of around 70 million euros. In the same period last year, operating profit was 251 million euros.

The operating margin amounted to 11.2 percent (prior year: 4.8 percent). Net income increased significantly in the third quarter to 809 million euros (previous year: -72 million euros).

Load factor at Lufthansa Group Airlines at 2019 level
The number of passengers travelling on board of the passenger airlines increased significantly in the third quarter compared with the previous year.

Between July and September, more than 33 million passengers flew with the airlines of the Lufthansa Group (previous year: 20 million).

The development of yields was particularly positive. In the third quarter, yields were on average 23 percent higher than in 2019 and thus reached a new record level.

At just over 86 percent, the average seat load factor was back at the level of the record years before the Coronavirus pandemic. Load factors in Business and First Class were even higher than in 2019.

Especially remarkable was the continued high premium demand from leisure travelers. Bookings among business travelers also continued to recover. Revenues in this segment are now back at around 70 percent of the pre-crisis level.

Due to the high demand and strong average yields, the Passenger Airlines segment returned to profitability with a positive Adjusted EBIT of 709 million euros (previous year: -193 million euros). All airlines in the segment generated an operating profit individually as well.

In the third quarter, the airlines’ result was burdened by costs for irregularities in air traffic amounting to 239 million euros.

The Lufthansa Group generated an Adjusted free cash flow of 410 million euros in the third quarter of 2022 (prior year: 43 million euros). The strong operating result and the effects of structural improvements in working capital management offset the outflows due to the seasonal reduction in bookings in the third quarter.

Net debt decreased further between July and September to 6.2 billion euros (31 December 2021: 9 billion euros).

Due to the further increase in the discount rate, the Lufthansa Group’s net pension obligation has fallen by almost 70 percent since the end of the previous year and now stands at around 2.1 billion euros (31 December 2021: 6.5 billion euros).

This had a positive effect on shareholders’ equity, which doubled to 9.2 billion euros as of September 30 (31 December 2021: 4.5 billion euros). Available liquidity at the end of the quarter was 11.8 billion euros (31 December 2021: 9.4 billion euros).

Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG:
“A healthy balance sheet is the basis for profitable growth, especially in economically challenging times.

“We have already made very good progress in reducing our debt. Thanks to our strong cash flows, our refinancing needs will remain low in the coming quarters. With disciplined capacity management, our yield focus and strict control of spending, we are confident that we will continue to be able to compensate well for inflation-related cost increases.”

Austrian Airlines and Brussels Airlines repay government stabilization measures early
Due to the strong increase in demand, a good liquidity development and the financial support of the Lufthansa Group, both Austrian Airlines and Brussels Airlines will repay the remaining government stabilization measures early by the end of the year.

In Austria, Austrian Airlines will repay the remaining 210 million euros of the total loan, and in Belgium, Brussels Airlines will repay 290 million euros. This means that all stabilization measures will end prematurely at the end of 2022.