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Lufthansa Operating Profit Triples, Topping Estimates, on Demand for Cargo
Deutsche Lufthansa AG, Europe’s second-biggest airline, tripled its quarterly operating profit, topping analysts’ estimates, on a recovery in demand for travel and freight transport.
Operating income was 159 million euros ($207 million), compared with 52 million euros a year earlier, the Cologne, Germany-based carrier said in a statement late yesterday. The company was predicted to earn 131 million euros, according to the average estimate of five analysts compiled by Bloomberg. Sales rose 33 percent to 6.9 billion euros.
While international air traffic rebounded 12 percent in June, Europe is lagging behind the global recovery, figures from the International Air Transport Association showed. Lufthansa, which is seeking to slash costs by 1 billion euros by 2012 and make its Austrian Airlines and BMI units profitable, is struggling to lift fares to pre-crisis levels.
“They seem to be outperforming the market with pretty strong load factors and yields,” said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin with an “outperform” recommendation on the shares. “They’re clearly benefiting from the cargo business with its big revenues.”
Lufthansa confirmed its target of posting a full-year operating profit that exceeds last year’s 130 million euros. Revenue will increase from 2009, the carrier said, without giving a figure.
Air France
The release came after the close of trading in Frankfurt, where Lufthansa rose 1.6 percent to 12.80 euros yesterday. The shares have gained 8.9 percent this year, valuing the carrier at 5.9 billion euros.
Air France-KLM Group, Europe’s largest airline, reported its first quarterly net income since 2008 this week, and predicted that it will break even on an operating level in 2010, excluding the costs of flight disruptions caused by a volcanic eruption in Iceland.
Lufthansa’s net loss for the first half was 104 million euros, compared with a 178 million-euro loss a year earlier, it said, without breaking out second-quarter figures. The company had a first-quarter net loss of 298 million euros.
Lufthansa plans to publish detailed earnings tomorrow at 8 a.m. in Germany, followed by a conference call at 10 a.m.
“The momentum behind the performance of the business has further increased the confidence to reach our profitability targets,” Lufthansa said in its statement. “The executive board still anticipates an improvement of the operating profit, which on today’s estimates should be in line with market expectations.”
Africa, Middle East
The Lufthansa-brand passenger unit flew 27.2 million passengers in the first six months, an increase of 1.8 percent from a year earlier, boosted by demand for connections to Africa and the Middle East. Passengers at the Swiss International Air Lines unit gained 2 percent.
The passenger numbers take into account the effects of pilot strikes, the cold winter and the ash cloud that caused a week-long closure of the European airspace in April.
Lufthansa reached a wage agreement with the Vereinigung Cockpit pilot union last month, averting further strikes which grounded hundreds of flights in February.
Yet six rounds of negotiations with cabin crews on job conditions and wages haven’t yielded an accord, and the UFO union said July 26 that it would go on strike if no “substantial progress” is made by the end of August.
To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net
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