Lufthansa Group launched a “turnaround program” for its Lufthansa brand, the company announced during a Wednesday earnings call.
“We need to reposition Lufthansa Airlines for long-term success in a competitive market environment, which is not an easy task, but a short-term task,” Lufthansa Group interim CFO Michael Niggemann said.
The namesake carrier reported first-half 2024 revenue of nearly €7.7 billion, a 5 percent increase year over year. Earnings before interest and taxes, however, were a loss of €442 million compared with positive EBIT of €118 million in H1 2023.
Lufthansa Group also includes Swiss, Austrian, Brussels and Eurowings airlines. The latter three also reported negative EBIT, but at lower figures ranging from €47 million to €89 million. Swiss was the only carrier with positive EBIT, at €280 million for the half.
Factors affecting Lufthansa include “some Asian markets and business travel in general continuing to recover more slowly than planned,” Lufthansa Group CEO Carsten Spohr said. The company also blamed inefficiencies in flight operations, significant aircraft delivery delays, strikes during the first quarter coupled with increased labor costs, and the decrease in yields because of marketwide capacity growth.
The turnaround program includes “consistently delivering on the premium promise,” such as expanding the carrier’s new Allegris products and further investing in product and service improvements; improving the customer experience by providing more efficient flight operations; optimizing the network “in line with stronger seasonalization of demand”; increasing productivity; reducing to six long-haul aircraft types by decommissioning Airbus A340-300, A340-600 and A330-200 and the Boeing 747-400 planes by 2028; and strategically expanding the flight operations of the Discover Airlines and Lufthansa City Airlines subsidiaries “to further develop the product offer at Frankfurt and Munich at competitive costs.”
Lufthansa Q2 Metrics
Lufthansa’s second-quarter traffic revenue for the passenger airlines segment of the company increased 4 percent year over year to nearly €7.6 billion. Total revenue for this segment was up 5 percent to more than €8 billion. Capacity increased 11 percent for the quarter compared with Q2 2023.
Despite these increases, the company noted that the financial situation of the passenger airlines in Lufthansa Group “has significantly deteriorated” the first half of 2024, particularly for its Lufthansa brand.
Q2 earnings before interest and taxes for the passenger airlines segment were down 41 percent year over year to €563 million. For the first half, Lufthansa reported negative EBIT of €357 million compared with positive EBIT of €422 million a year prior.
Lufthansa Group guidance includes third-quarter capacity at 96 percent of 2019 levels and full-year 2024 capacity at 92 percent of 2019 levels, including reductions in the winter schedule. The company also expects a decline in adjusted EBIT for the third quarter, and EBIT of €1.4 billion to €1.8 billion for the full year, down from the previous figure of €2.2 billion.
The company also announced the completion of the sale of AirPlus International to SEB Kort.
