Lufthansa Technik (LHT) must continue in its efforts to cut costs if it is to match the positive results it achieved in 2004 this year, says chairman August Henningsen. Speaking at the presentation of the company's annual results, Henningsen said that the maintenance repair and overhaul (MRO) market grew 5.3% overall last year, following two years of decreasing demand. "But the price level for those MRO services was now appreciably lower," he added, as reduced revenues at airlines mean they are looking to pay less for MRO, airframes and engines are becoming more reliable and there is still oversupply in the MRO market.
Despite the rapid growth of low-cost airlines and the increasing numbers of long-haul aircraft being flown, "even if we do fully implement all our earnings-improving projects this year, the good results that we achieved in 2004 will be very hard to match", he says, adding: "It is difficult, but not impossible." The company predicts further growth for 2005, especially in sales to customers outside the Lufthansa group, and says this trend is already discernible in the first three months of the year.
The company's sales revenue increased 7.3% to €3.1 billion ($4.1 billion), while the 19 companies that make up the LHT group reported €207 million operating earnings, a 32% increase on the previous year's results. "Our success in 2004 was again largely due to a whole array of cost-management measures." Cost-cutting and increased efficiency measures, collectively known as the "D-Check" programme, have saved €130 million since their launch in 2002, Henningsen says. The company plans a cost-cutting programme of €240 million for this year, chief financial officer Peter Jansen adds.
LHT is in the process of setting up a joint venture with Air France Industries to undertake component overhaul for the Airbus A380, which the two companies' sister airlines have on order. A French chief executive will lead the team based in Hamburg, says LHT. More details are expected to be revealed about the joint venture next month.
Around 40 of 420 jobs have been cut at LHT's completion centre, following "poor capacity utilisation". Forty more job cuts are planned, but capacity utilisation is now secured well into 2006, the company says. Sales for the sector plummeted by 46.9%. LHT hopes to attract new business from Swiss International Air Lines, continuing to work with Lufthansa's acquisition on the basis of customer and supplier.
Source: Flight International