Advertising

Lufthansa achieves record full-year profit

Lufthansa posted a 70% improvement in adjusted full-year EBIT to reach €2.97 billion ($3.68 billion) for 2017 after revenues were lifted by its acquisition of Air Berlin as well as gains from new pilot labour deals..

It achieved the record profit on a 12% rise in revenues to €35.6 billion, during a year in which it expanded the scope of its operations with various Air Berlin assets.

The improved profit performance was helped by a positive €582 million one-off effect, recognised in the income statement in December, from its new collective deal with pilot union Vereingung Cockpit covering crews across Lufthansa, Lufthansa Cargo and its Germanwings unit. The improvement took the carrier's adjusted EBIT margin up from almost three points to 8.4%.

Group net profit increased a third to €2.36 billion in 2017.

"Our endeavours of the past few years are paying off," says Lufthansa chief executive Carsten Spohr. "Our modernisation has a sustainable impact. We have achieved the best result in the history of our company."

Chief financial officer Ulrk Svensson adds: "We are particularly pleased that we were again able to lower our passenger airlines’ unit costs, excluding fuel and currency factors, last year."

The group cites strong demand and a positive pricing environment for helping its network carriers Lufthansa, Swiss and Austrian Airlines – increase their combined adjusted EBIT nearly 50% percent to €2.3 billion. The German operation contributed €1.63 billion, Swiss 542 million and Austrian €94 million.

Its expanded point-to-point operations, which included wrapping the former Air Berlin capacity into Eurowings, moved from a loss of €100 million to an adjusted EBIT of €94 million. Lufthansa says the inorganic growth following the insolvency of Air Berlin will make "positive contribution" for the point-to-point unit from 2019 onwards.

The strong performance for 2017 was achieved against a backdrop of relatively low fuel costs. Lufthansa expects these to climb €700 million in 2018 but, in its first guidance for the year, expects this to be "largely offset" by an improved operating performance, which will help adjusted EBIT to be "only slightly below" last year's levels.

Organic capacity is expected to increase by some 7% as unit revenues, excluding currency factors, remain "broadly stable", it says. Unit costs excluding fuel and currency should be further reduced by 1-2%.

Related Content
Advertising
Advertising
What's Happening Around "Lufthansa"
').remove(); }); var additionalTrackingProperties = { ArticleId: '446794', ArticleTitle: 'Lufthansa achieves record full-year profit', ArticleCategory: 'Finance' }