Lufthansa expects further ‘significant improvement’ after return to profit
By Ilona Wissenbach and Joanna Plucinska
(Reuters) – Germany’s Lufthansa on Friday delivered an “unprecedented” turnaround as it swung to a 1.51 billion euro profit in 2022 and expects a significant improvement in earnings this year, pushing its shares up to a three-year high as air travel rebounds.
Passenger numbers more than doubled and net revenue almost doubled from 2021, although the figures remain short of pre-pandemic levels.
Lufthansa is back,” CEO Carsten Spohr said in a statement. In just one year, we have achieved an unprecedented financial turnaround … Demand for air travel remains high in 2023,” he added.
Shares jumped to a three-year high, gaining more than 5% on Friday, having climbed more than 30% in value since December last year.
The company’s full-year operating profit of 1.51 billion euros ($1.60 billion) came after a loss of 1.6 billion euros a year ago.
Fourth-quarter profit swung to 575 million euros from a loss of 42 million euros, in line with expectations.
The balance sheet also improved, with net debt falling to 6.9 billion euros from 9 billion euros.
However, operating profit was still 34% lower than the pre-pandemic 2019 level and passenger numbers had only recovered 72%. Like others in the industry, Lufthansa is also grappling with high cost inflation as well as a surge in fuel prices.
Yields are, however, expected to stay about 20% above 2019 levels as higher costs are passed on to passengers, a Lufthansa representative said on a media call.
The company said it expects “further significant improvement” in operating profit this year.
After cancelling many flights last year, the company is trying to avert travel chaos this summer by scrapping some scheduled flights as airport and technical staff remain in short supply.
Spohr told a press conference the possibility of further cancellations would depend on airports rather than airlines but there was a risk that capacity could be limited due to high demand.
Germany’s Verdi Union, which recently planned strikes impacting airports and flights, said Lufthansa’s return to profit meant it needed to negotiate a better deal with employees.
The Executive Board must now win back the trust of employees,” Marvin Reschinsky, Verdi group manager for Lufthansa, said, as the union pushes for all staff to receive a bonus of 3,000 euros.
Spohr said Lufthansa had already negotiated a permanent pay rise for employees above inflation.
($1 = 0.9418 euros)
(Reporting by Anna Mackenzie and Anastasiia Kozlova in Gdansk, Ilona Wissenbach in Frankfurt, Writing by Joanna Plucinska in London; Editing by Edwina Gibbs, Elaine Hardcastle)
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