05.05.2015, 10:05
Lufthansa increases first quarter result
OREANDA-NEWS. The Lufthansa Group has reported a positive course of business for the first quarter of 2015. At total revenue of nearly 8 per cent higher, the EBIT and adjusted EBIT both rose by EUR 73m. Both key performance indicators were thus 30 per cent higher than in the previous year. The Group closed the first quarter with an adjusted EBIT of EUR -167m (previous year: EUR -240m).
Simone Menne, Chief Officer Finance and Aviation Services of Deutsche Lufthansa AG, says: “All operating business segments were able to increase their results in the first quarter. Above all, SWISS and Lufthansa Cargo have done better than in the previous year. But Lufthansa German Airlines has also shown a positive development, although it was worse hit by strikes and other one-off effects than in the previous year.”
The Group result rose significantly more strongly than the adjusted EBIT in the reporting period. With a plus of EUR 677m in comparison with the same quarter in the previous year, the Lufthansa Group achieved a consolidated result of EUR 425m. An extraordinary effect from the premature exchange of JetBlue swaps made a significant contribution to this development. This transaction alone improved the financial result without an effect on equity by EUR 503m.
The result was once again overshadowed by the consequences of the strike called by the trade union Cockpit among the pilots of Lufthansa German Airlines, Lufthansa Cargo and Germanwings on a total of six days between January and March 2015. Flight cancellations caused by strikes led to a burden on the result of EUR 42m. Due to weaker advance bookings in the following quarters as a consequence of the strike, Lufthansa expects a further burden on the result of EUR 58m. Cash flows, which are important in view of high total investments, developed positively in the reporting period.
Cash flow from operating activities rose to EUR 1,394m (previous year: EUR 855m), the free cash flow improved to EUR 532m (previous year: EUR 195m). The actuarial interest rate for valuing pension obligations declined further in the first three months of the year, in Germany from 2.6 per cent to 1.7 per cent now. Thus the arithmetic pension burden rose by EUR 3.4bn. This was contrasted with a growth in pension assets of around EUR 500m. The equity ratio fell by 5.7 percentage points to 7.5 per cent now. “This development shows once again how volatile the key figure ‘equity ratio’ has become since the introduction of the new IFRS accounting standards. We are not alone in this situation. However, other groups have already made the necessary structural change from a cover oriented to a contributions oriented pension commitment. Here, more urgently than ever, we need sustainably financeable solutions in place of obsolete structures.
We can only achieve this together with our collective bargaining partners,” says Simone Menne. Operating costs and income showed strong fluctuations in comparison with the same quarter in the previous year. What was decisive here was the significantly lower oil price, the continuing weakness of the euro and low interest rates. Fuel costs were EUR 209m lower than in the same quarter in the previous year, while expenses on fees went up by nearly 7 per cent, despite the lower number of flights and passengers.
The weak euro and the rise in pension expenses also led to an increase in staff costs of nearly 7 per cent. Simone Menne summarised the interim report for the first three months of the year: “We see positive developments in the result and in cash flow. This shows we are on the right course. At the same time, we continue to see great pressure to act. The enormous pension burdens are putting considerable pressure on our equity. And we cannot accept the continuing increase in fees or the development of our unit costs. Great efforts remain to be made here in order to strengthen the international competitiveness of all the business segments of the Lufthansa Group.”
Simone Menne, Chief Officer Finance and Aviation Services of Deutsche Lufthansa AG, says: “All operating business segments were able to increase their results in the first quarter. Above all, SWISS and Lufthansa Cargo have done better than in the previous year. But Lufthansa German Airlines has also shown a positive development, although it was worse hit by strikes and other one-off effects than in the previous year.”
The Group result rose significantly more strongly than the adjusted EBIT in the reporting period. With a plus of EUR 677m in comparison with the same quarter in the previous year, the Lufthansa Group achieved a consolidated result of EUR 425m. An extraordinary effect from the premature exchange of JetBlue swaps made a significant contribution to this development. This transaction alone improved the financial result without an effect on equity by EUR 503m.
The result was once again overshadowed by the consequences of the strike called by the trade union Cockpit among the pilots of Lufthansa German Airlines, Lufthansa Cargo and Germanwings on a total of six days between January and March 2015. Flight cancellations caused by strikes led to a burden on the result of EUR 42m. Due to weaker advance bookings in the following quarters as a consequence of the strike, Lufthansa expects a further burden on the result of EUR 58m. Cash flows, which are important in view of high total investments, developed positively in the reporting period.
Cash flow from operating activities rose to EUR 1,394m (previous year: EUR 855m), the free cash flow improved to EUR 532m (previous year: EUR 195m). The actuarial interest rate for valuing pension obligations declined further in the first three months of the year, in Germany from 2.6 per cent to 1.7 per cent now. Thus the arithmetic pension burden rose by EUR 3.4bn. This was contrasted with a growth in pension assets of around EUR 500m. The equity ratio fell by 5.7 percentage points to 7.5 per cent now. “This development shows once again how volatile the key figure ‘equity ratio’ has become since the introduction of the new IFRS accounting standards. We are not alone in this situation. However, other groups have already made the necessary structural change from a cover oriented to a contributions oriented pension commitment. Here, more urgently than ever, we need sustainably financeable solutions in place of obsolete structures.
We can only achieve this together with our collective bargaining partners,” says Simone Menne. Operating costs and income showed strong fluctuations in comparison with the same quarter in the previous year. What was decisive here was the significantly lower oil price, the continuing weakness of the euro and low interest rates. Fuel costs were EUR 209m lower than in the same quarter in the previous year, while expenses on fees went up by nearly 7 per cent, despite the lower number of flights and passengers.
The weak euro and the rise in pension expenses also led to an increase in staff costs of nearly 7 per cent. Simone Menne summarised the interim report for the first three months of the year: “We see positive developments in the result and in cash flow. This shows we are on the right course. At the same time, we continue to see great pressure to act. The enormous pension burdens are putting considerable pressure on our equity. And we cannot accept the continuing increase in fees or the development of our unit costs. Great efforts remain to be made here in order to strengthen the international competitiveness of all the business segments of the Lufthansa Group.”
| Lufthansa Group | January – March | Change | ||
|---|---|---|---|---|
| 2015 | 2014 | |||
| Revenue | € m | 6,973 | 6,462 | +7.9% |
| of which traffic revenue | € m | 5,419 | 5,161 | +5.0% |
| Operating result | € m | -133 | -209 | +36,4% |
| Net profit/loss for the period | € m | 425 | -252 | |
| EBIT | € m | -144 | -217 | +33.6% |
| Adjusted EBIT | € m | -167 | -240 | +30.4% |
| Adjusted EBIT margin | In % | -2.4% | -3.7% | +1.3% |
| Investments | € m | 815 | 859 | -5.1% |
| Cash flow from operating activities | € m | 1,394 | 855 | +63% |
| Employees as of 31.03.2015. | 118,569 | 118,712 | -143 | |
| Earnings per share | € | 0.92 | -0.55 | +1.47 |
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