Lufthansa’s profits feel the pinch of reduced demand in the first quarter of 2009
Loss of 44 million euros in the first three months of 2009
Deutsche Lufthansa AG has made an operating loss of 44 million euros in the traditionally tough first three months of 2009. In the current business year the biggest German airline was not able to live up to its record success of the previous year, due to a world-wide depression as well as the on-going poor economic climate. “The current crisis is putting a strain on our profits,” said Stephan Gemkow, the Chief Financial Officer for Lufthansa, of the company’s first quarter figures, “but our foundations are solid and we have the right instruments to take counter action. Now we will see who is prepared and able to react effectively against these difficult conditions. Lufthansa is a strong company and can hold its course, even in difficult times.”
Concerning the performance of the particular business units in the first quarter of 2009 Gemkow said: “Our strategy has not changed from being oriented towards creating a sustainable value enhancement. At the same time Lufthansa benefits from the wide-ranging array of business units. We are developing our core business through the expansion of our passenger airline group and the further strengthening of our alliances and partnerships, in order to emerge from the current financial climate stronger than ever.” Lufthansa’s business unit passenger airline group had to deal with a distinct decrease in its operating result, due to the depression and the resulting reduction of traffic revenues. Considering the prolonged reduction in demand, the capacities have been reduced further. Logistics showed a significant slump in revenue and operating result in the first three months. To counter this development, measures such as a reduction in capacity, a cost-reduction programme and short-time work at German locations are being applied. In contrast to this Lufthansa Technik showed an increase in revenue in the first quarter. However, due to a record date effect in inventory valuation, the company showed a lower operating result compared to the first quarter of 2009. The difficult economic conditions have caused a slump in revenue and operating result in IT services. The business unit catering has seen a reduction in demand, but the operating result increased partly due to a one-time items completion of a judicial arbitration settlement.
Taking into account the continuing difficult economic conditions, Lufthansa’s Executive Board for the current financial year expects a decline in revenue and a considerable reduction in the operating result for the group, compared to the previous year. Gemkow said, however, that he remained confident that Lufthansa could maintain a significantly positive operating result, even in this environment.
The first quarter 2009 in numbers
Lufthansa’s revenue in the first three months of 2009 was 5 billion euros, 10.3 per cent less than the year before. Traffic revenue sank by 14.6 per cent, to 3,8 billion. The main reason for this reduction was the lower number of passengers and the amount of freight transported. Overall the company’s operating income went down to 5,8 billion euros, a reduction of 6.8 per cent.
Operating expenses decreased to 5,9 billion euros in the course of the first three months. Key to this were fuel costs of 739 million euros; equivalent to a year-on-year reduction of 31 per cent, which resulted mainly from changes in price and volume. A negative currency effect, as well as a negative result from fuel hedging had the opposite effect.
The group’s operating result overall amounted to -44 million euros, which is 216 million euros less than in the same period last year. The loss can mainly be blamed on the negative developments in the units passenger airline group and logistics. The company’s net profit is -256 million euros; this time last year it was at 44 million euros.
During the reported period Lufthansa had capital expenditures of 664 million euros, of which 519 million euros went to the expansion and modernisation of the fleet. 77 million euros were gained from the disposal of the remaining Condor shares and the repayment of related loans. The operating cash flow amounted to 708 million euros. The group has accounted for a net liquidity of 46 million euros in the first quarter.
The complete interim report for the first quarter of the financial year 2009 is available on the internet via www.lufthansa.com/investor-relations.
Deutsche Lufthansa AG
Disclaimer in respect of forward-looking statements
Information published in this press release with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication. Since forward-looking statements are by their very nature subject to uncertainties and imponderable risk factors – such as changes in underlying economic conditions – and rest on assumptions that may not or divergently occur, it is possible that the Group’s actual results and development may differ materially from those implied by the forecasts. Lufthansa makes a point of checking and updating the information it publishes. It cannot, however, assume any obligation to adapt forward-looking statements to accommodate events or developments that may occur at some later date. It neither expressly nor conclusively accepts liability, nor gives any guarantee, for the actuality, accuracy and completeness of this data and information.
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