A China Eastern Airbus A330-300, performing flight MU-721 from Shanghai Hongqiao International Airport to Hong Kong International Airport, when about…
Lufthansa Group Posts Stunning Financial Turnaround
Lufthansa Group has posted an operating profit of €1.5 billion ($1.59 billion) for the 2022 calendar year. “Lufthansa is back,” stated Carsten Spohr, chief executive officer of Deutsche Lufthansa AG. “In just one year, we have achieved an unprecedented financial turnaround. With an operating profit of 1.5 billion euros, the Lufthansa Group has achieved a much better result than expected. Demand for air travel remains high in 2023.” Deutsche Lufthansa AG is the parent company of airlines Lufthansa, Austrian, SWISS, Brussels Airlines, Lufthansa CityLine, Air Dolomiti and Eurowings Discover.
In the previous financial year, the German consortium posted a €1.7 billion ($1.8 billion) loss on revenues of €16.8 billion ($17.8 billion). In 2022 the group saw revenues almost double to €32.8 billion ($34.75 billion). Passenger demand across the airlines of the Lufthansa Group more than doubled from 47 million carried in 2021 to 102 million in 2022.
Reflecting on the ‘unprecedented financial turnaround’, Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG said: “I have always made it clear that returning to a strong balance sheet was one of our top priorities in overcoming the crisis. Only a strong balance sheet provides the resilience needed to invest in the future of our business and to manage future crises. That is why I am extremely pleased with the progress made last year. We remain firmly committed to generating consistently strong free cash flows and continuing the deleveraging in 2023 and beyond.”
The Lufthansa Group had undertaken an ambitious transformation process and cost-cutting program across all areas of the business. The company reported that over 90 percent of this strategy had been completed through the end of the 2022 reporting year. The Lufthansa Group is also negotiating with the Italian Ministry of Economy and Finance on potential investment in the Italian airline ITA Airways.
Other elements of the group’s strategy include the evaluation of selling what it calls ‘non-core assets.’ In a press release highlighting the 2022 result Deutsche Lufthansa AG reports that ‘AirPlus and LSG’s remaining catering business, following the sale of the European part, will be sold as soon as market conditions permit. Preparations for a possible partial divestiture of Lufthansa Technik are proceeding according to plan as talks with selected investors have already begun.’
Looking forward to the upcoming European summer the Lufthansa Group expects to operate at 85 to 90 percent of 2019 pre-pandemic capacity. However, a note of caution was raised in that ‘capacity development will be limited by the bottlenecks still expected in the European aviation system.’ This follows previously announced cuts to summer schedules impacted by labor shortages within the aviation industry particularly affecting major airports.
Striking an optimistic note for the future of the Lufthansa Group Spohr said: “We are investing billions in new fuel-efficient and state-of-the-art aircraft. With innovative services, a new premium cabin on board, and new digital tools, we want to remain the quality and innovation leader in our industry.”
In addition, Spohr added: “Likewise, it is our ambition to drive forward effective climate protection, for example by being the first airline group worldwide to introduce Green Fares. The Lufthansa Group is already number one in Europe and number four worldwide. For our guests and our employees, we want to continue to grow, shape the future and expand our market position.”
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