Lufthansa shrugged off the impact of fuel price rises to consolidate its position as Europe's leading airline last year. The German carrier recorded an operating profit of €1.04 billion ($0.93 billion), around 44% up on 1999, on total group sales of €15.2 billion, a rise of nearly 19%.
Lufthansa's fuel costs rose by €600 million, or 65%, says chief financial officer Karl-Ludwig Kley, but the figure would have been closer to €1 billion had it not been for the airline's extensive price hedging measures.
The airline is conducting what it terms as a "D check" of its operations in a bid to continue to improve cash flow. Kley admits, however, that its target of repeating last year's operating profit is looking increasingly ambitious.
Despite the economic downturn in the North American market, the main threat to the carrier's 2001 profitability is a possible pay dispute with its pilots. Lufthansa agreed terms with its ground staff and cabin crew in March, but has failed to reach a compromise with the pilots over demands which the company says are unacceptable.
A cash windfall of €375 million from disposal of the Amadeus computer reservation system boosted Lufthansa's bottom line, enabled the carrier to record a net profit of €689 million, 9.3% up on 1999.
Lufthansa's performance in the first quarter of this year was slightly less impressive. A further increase in fuel prices, due mainly to a higher US dollar exchange rate, dented earnings by €122 million. The airline recorded a €5 million operating profit in first quarter 2001, €94 million less than the same period last year.
Executive vice president sales Thierry Antinori says Lufthansa will, nevertheless, stick to its strategy of steady expansion. He says capacity is likely to grow by 6-7% this year against a background of overall market growth of 5-6%.
Source: Flight International
