Lufthansa Group airlines carried some 67 million passengers during the first six months of the year, marking a new record for the period, a corporate statement said, adding that capacity, volumes sold and seat load factor were also all at new record highs.

The biggest driver here was the Network Airlines, with both Lufthansa German Airlines and SWISS making positive earnings contributions by achieving not only higher unit revenues but above all substantial reductions in their unit costs.

Lufthansa Group increased its total first half-year revenues by 5.2 per cent in 2018, excluding the impact of the first-time application of the IFRS 15 accounting standard. Reported total first half-year revenues amounted to EUR16.9 billion ($19.7 billion), broadly in line with the prior-year level.

Traffic revenue for the first six months totalled EUR13.2 billion, which, excluding the first-time impact of IFRS 15, represents an increase of 7.0 per cent. Adjusted EBIT – the key profit metric of Lufthansa Group – was roughly at its prior-year level at EUR1,008 million.

Adjusted EBIT margin amounted to 6.0 per cent (compared to 6.1 per cent in the first half year of 2017). Net income for the period also remained broadly stable at EUR677 million (prior-year period: EUR672 million).

“The prime features of Lufthansa Group’s development in the first half of 2018 were strong growth and a simultaneous improvement in our unit revenues. Achieving both simultaneously is a significant success,” said Ulrik Svensson, chief financial officer of Deutsche Lufthansa AG.

“At our Network Airlines, we were able to more than offset the added burden imposed by higher fuel costs through structural cost reductions and improved results by 26 per cent. Without the integration costs at Eurowings, which we willingly accepted to further strengthen our market position in Europe, the Group’s result would have grown.”

First half-year fuel costs rose by EUR216 million to EUR2.8 billion. The increase is attributable to both the higher volumes and a higher fuel price.

Full-year outlook for 2018

Lufthansa Group reaffirms its previous forecast for 2018. Full-year capacity will increase by around 8 per cent – slightly less than the earlier forecast of 8.5 per cent growth. Fuel costs are expected to be some EUR850 million higher than in 2017.

“With continuing strong demand, we are confident that, despite a challenging prior-year basis for comparison, we will be able to report solid revenue trends for the second half of 2018, too,” said Group CFO Ulrik Svensson.

“We will also continue to benefit from the substantial improvements in the cost efficiency of our Network Airlines. With Eurowings, following its sizeable capacity increase, our prime objective is to return to profitability next year. We will also create the structures to raise Eurowings’ profitability to the levels of its prime competitors over the next three to four years.” – TradeArabia News Service