Lufthansa Group is moving ahead with plans to sell a minority stake in its Lufthansa Technik unit to an investor or through an initial public offering this year. It comes as the maintenance, repair and overhaul specialist reported a return to profitability in 2021.
Lufthansa Technik chief executive Johannes Bussmann said at a 9 March results announcement that the business is in stronger shape than before Covid-19, and predicted the global MRO market will return to pre-pandemic levels by 2023, despite concerns over the impact of the Ukraine crisis.
Lufthansa first said in late 2020 it was preparing ground for a possible part-divestment of its MRO unit – one of the biggest in the world, with capabilities in large business aircraft completions as well as airliner interiors.
Continuing uncertainty over the air travel sector meant little progress was made in 2021. However, Bussmann now says the “market is ripe” to attract investment.
Hamburg-based Lufthansa Technik reported an EBIT of €201 million ($221 million) on revenues up 7% to just over €4 billion in 2021, following a loss of €383 million the previous year.
Lufthansa Technik has stopped all dealings with around 12 Russian customers in response to the conflict in Ukraine and expects to take a revenue hit of up to €250 million this year as a result.
Although Lufthansa Technik does not have any Russian-operated aircraft in its hangars, it does have a number of engines. However, these are property of lessors, and will be returned, says Bussmann.
After making major job cuts in 2020, the business is recruiting again, with plans to take on 1,500 new hires wordwide, including 700 in Germany. This will return it to its pre-crisis workforce of around 22,000.
Although he describes 2021 as “another tough year”, Bussman says the division has “restructured painfully” and is now “better, more efficient and more powerful than before the crisis”.
He says last year’s performance was also driven by a “noticeable upturn in air traffic”, which “ensures fuller workshops”. At the end of 2021, Lufthansa Technik had exclusive contracts covering more than 4,200 aircraft owned by around 800 customers, he adds.
The Covid-19 crisis has resulted in fewer airline bankruptcies or airliner retirements than the business foresaw in mid-2020, he says.