Lufthansas operating profit at euro 28 m

Mumbai: “Despite the recessional trend and the impact of terrorist attacks, Lufthansa (www.lufthansa-financials.com) has turned in a respectable result with an operating profit of euro 28 million. We are in a better position than most of our competitors,” said Lufthansa chairman and CEO Jürgen Weber while presenting his company’s results for 2001.

“Air traffic was subjected to unprecedented trials and tribulations in the business year in 2001. Some of our competitors failed to survive the test, others stayed afloat but only by being drip-fed by the state,” Weber said. “The liberal system that air travel should aspire to be was far from being reality.”

“Although our firm objective is to return again to the old growth path as quickly as possible, we want to attain that objective, but not under the old conditions governing the airline business,” Weber said. He firmly rejected state subsidies and measures that distort competition, and called for stable insurance policies for airlines, uniform air traffic security standards worldwide, and the elimination of structural deficiencies on the ground and in the air.

Given the still uncertain cyclical picture and world political situation, it is too early at the moment to give a reliable estimate of the likely result for the year 2002. But Luft­hansa anticipates that, due to capacity adjustments in line with market requirements and stringent cost controls, the operating result for the first quarter will not be disappointing. “We are on the way up,” Weber said. For 2002 as a whole Lufthansa expects a markedly improved operating result compared with 2001.

In what was the most difficult year to date for the air traffic industry, the Lufthansa group held up well, posting an operating profit of euro 28 million. Even so, this result is significantly lower than the corresponding figure in 2000 of euro 1 billion as the group’s course of business suffered severely from the consequences of the terror attacks in the US and the global economic slowdown.

Nevertheless, the objective after 11 September 2001 of avoiding an operating loss was achieved due to rapid capacity adjustments, comprehensive cost-cutting measures and the efficiency-boosting programme, ‘D-Check.’

Amid an extremely difficult operating climate, Lufthansa generated traffic revenue of euro 12.3 billion, which was 2.4 per cent less than in 2000. Lufthansa managed to limit the decline in traffic revenue in the passenger business segment to 1.5 per cent by virtue of network optimisation measures and stable average yields.

In the group’s freight business, which is highly sensitive to changes in the overall economic setting, average yields were actually improved. Consequently, freight traffic revenue was only 5.8 per cent down on the year. Other revenue climbed sharply by 67.4 per cent to euro 4.4 billion, mainly because of the first-time consolidation of the new companies in the catering and maintenance, repair and overhaul segments.

The Lufthansa group, thus, generated total revenue of euro 16.7 billion in 2001, which was 9.8 per cent more than in the previous year. Other operating income decreased by 10.4 per cent or euro 0.2 billion. This was chiefly due to lower book profits.

Fuel costs again rose last year. The group had to spend euro 122 million more on this item than in 2000. Had it not been for the group’s forward-looking price hedging strategy the fuel bill would have been euro 95 million higher still. The cost of insurance also increased disproportionately after 11 September 2001.

Staff costs climbed by 23.6 per cent, principally owing to the first-time consolidation of Sky Chefs. The operating expenses include the unscheduled write-down of goodwill in respect of the Onex Food Services group (euro 495 million) and provisions for anticipated losses from catering contracts in Scandinavia (euro 180 million).

Lufthansa recorded a net loss for 2001 of euro 633 million. The executive and supervisory boards therefore agreed that no dividend should be paid. Lufthansa invested a total of euro 3 billion last year in modernising the fleet (euro 1.0 billion) and in financial asset acquisitions, among which the full takeover of Sky Chefs accounted for euro 1.2 billion.

Lufthansa group: Key data

* Capital expenditure without results of joint ventures and associated companies accounted for under the equity method. Previous year’s figures not comparable due to charges in the group of consolidated companies.