Deutsche Lufthansa AG expects earnings to rise above pre-pandemic levels in the second quarter as air travel continues its rebound from the pandemic, putting the carrier closer to achieving its longer-term profit goals.
(Bloomberg) — Deutsche Lufthansa AG expects earnings to rise above pre-pandemic levels in the second quarter as air travel continues its rebound from the pandemic, putting the carrier closer to achieving its longer-term profit goals.
Adjusted earnings before interest and taxes this quarter will surpass the €754 million ($831 million) achieved in the same period in 2019, Europe’s biggest airline group said in a statement. Lufthansa said summer flights to Spain are particularly popular, with demand for city breaks, a favorite among Europeans before coronavirus struck, recovering significantly despite inflation squeezing disposable incomes.
“The continuously strong demand gives us confidence for the coming months,” Lufthansa Chief Financial Officer Remco Steenbergen said in the statement. “The summer travel season will provide a major contribution to achieving our targets for 2023.”
Lufthansa is the first of Europe’s big three network airlines to report earnings, providing an upbeat preview of the early summer months — the crucial travel period for the aviation industry. Having lost billions during the pandemic, carriers are looking to boost earnings by restricting capacity, allowing them to pay down debt incurred during the pandemic even as inflation raises costs.
Long-Term Targets
The strategy is bearing fruit at Lufthansa. The German airline said its first-quarter adjusted operating loss fell by more than half to €273 million from a year earlier, helped by lower outflows at its namesake airline brand. Revenue rose 40% to €7 billion.
Lufthansa stuck to its guidance for a further significant improvement in adjusted EBIT in 2023. It also said it expects capacity to increase to about 85% to 90% on average in 2023 compared with 2019.
Given the upbeat outlook, the airline said it’s “expected to make significant progress towards achieving the targets set for 2024,” when Lufthansa wants to achieve an adjusted operating margin of at least 8% and adjusted return on capital employed of at least 10%.
Earnings at the Lufthansa Cargo logistics division continued to decline from a record due to falling global freight rates and the normalization of supply chains. Results at its maintenance arm improved as the rise in air travel spurred demand for repair and other services.
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