EUR 0.25 per share
Deutsche Lufthansa AG upped its revenue by 8.6 per cent to EUR 28.7bn in the 2011
financial year and posted an operating profit of EUR 820m. Its operating profit was therefore
down EUR 200m compared to the previous year. Christoph Franz, Chairman of the
Executive Board and CEO of Deutsche Lufthansa AG, said: “Posting a profit of this size is
impressive in such a turbulent environment shaped by exogenous shocks and regulatory
pressures. This confirms once again that the Lufthansa Group is Europes number one.” As
of the year-end, the net loss for the period comprised a loss of EUR 285m from discontinued
operations. This included the current result recorded by the Group company British Midland
Ltd. (bmi) – due to be sold to the International Airlines Group – and valuation effects in
connection with its disposal. Taking this into consideration, the Group generated a net loss of
EUR 13m. However, the result from continuing operations amounted to EUR 289m. Despite
posting a negative result in its individual financial statements prepared in accordance with
German commercial law (HGB), Lufthansa intends to make an exception and deviate from its
dividend policy. The Company will therefore propose a payout of EUR 0.25 per share at the
Annual General Meeting on 8 May. Christoph Franz commented: “Trusting in the Lufthansa
share and our Companys positive development is worthwhile. That is why we want to enable
our investors to share in our operating profit again this year.”
Group programme SCORE aims to increase operating margin long term
However, Franz also emphasised: “Although the operating profit for 2011 is generally
pleasing in itself, the operating margin is not.” The Groups adjusted operating margin for
2011 was 3.4 per cent. This is why Lufthansa rolled out a Group-wide programme called
SCORE in January with the aim of sustainably improving its result by at least EUR 1.5bn by
the end of 2014. By implementing this scheme, the Group wants to be able to fund its capital
expenditure in the long run and safeguard its financial solidity. “We have to respond to the
change in our industry with flexible structures that enable us to remain Europes number one
in the future. We also want to keep investing in innovative products for our customers,” said
Franz. Lufthansa is taking various steps in a bid to achieve its goal, such as realising
potential synergies in the Groups purchasing and making further improvements to the
harmonisation of the airlines flight plans. Franz added that it would also be necessary to make both administration and management functions leaner and to pool shared services in
order to further reduce the Groups overhead costs.
Passenger business suffers from high fuel costs
The Passenger Airline Group business segment contributed EUR 349m towards the Groups
operating profit for the year after increasing its revenue to EUR 22.3bn. Higher fuel costs
were the main reason behind the 44.5 per cent reduction on the previous years figure of
EUR 629m. The Group also paid air traffic tax totalling EUR 361m to the German and
Austrian authorities. The business segment reduced its planned growth for 2012 from 9 to 3
per cent in the third quarter of 2011 and now anticipates a total increase of 2 per cent in
available seat-kilometres this year. Meanwhile, Lufthansa Passenger Airlines is examining
zero year-on-year growth. It accounted for EUR 168m of the Passenger Airline Groups
operating result. This represents a fall of EUR 214m compared with the previous year.
However, the company upped the share of premium income on long-haul routes by 1.7
percentage points to over 50 per cent – even though Economy Class now accounts for a
larger proportion of seat s than before, following the fleet modernisation. The Climb 2011
programme to safeguard earnings, which was wrapped up at the end of the year, also
enabled Lufthansa Passenger Airlines to reduce its unit costs (adjusted for fuel costs) by 2.5
per cent overall and by 4 per cent on short-haul routes. SWISS proved best able to
compensate for the high fuel prices and weak economic environment, generating an
operating profit of EUR 259m. However, this was EUR 39m down on the previous years
figure. Although Austrian Airlines improved its operating result by 6.1 per cent, it still posted
an operating loss of EUR 62m. For this reason, restructuring the company remains a top
priority and efforts have been stepped up in this field. Air traffic tax had a major impact on
Germanwings operating result, which came in at EUR -52m on 31 December 2011.
Compared to other airlines Germanwings was hit the hardest by the air traffic tax, which
amounted to 5.4 per cent of its revenue.
Freight and service business segments make a positive contribution to consolidated
operating result
As in the past, the Group benefited from its structure: the other business segments
contributed towards the Groups overall result with an operating profit. In the Logistics
business segment, Lufthansa Cargo achieved an operating result of EUR 249m – the second
best in its history. Flagging industry growth in the second half of 2011 and rising fuel costs
were the main reasons why it was unable to match the record figure from 2010. At this stage,
Lufthansa Cargo has no plans to increase capacity this year as against 2011. Lufthansa
Techniks operating performance developed well, but the company fell marginally short of its
previous years result and posted an operating profit of EUR 257m due to provisions for longterm
contracts. Thanks to the realignment of Lufthansa Systems, the IT Services business
segment almost doubled its operating profit to EUR 19m and stabilised its revenue. In the Catering business segment, LSG Sky Chefs grew both its revenue and its operating profit,
recording a figure of EUR 85m for 2011.
Group anticipates an operating profit in the mid three-figure million
euro range for 2012
The Lufthansa Group is anticipating an operating profit in the mid three-figure million euro
range for the current financial year. Franz expects all the business segments to contribute
towards this result, with operating profits forecast across the board. However, he added that
further developments in the business environment – and fuel prices in particular – would
determine precisely how high the Groups operating profit would be at year-end. Franz
emphasised: “We are determined to keep positioning ourselves at the forefront of the
competition in the future. We have the resources to do this on our own. We have paved the
way to take the necessary steps and have already seen some initial results. The Executive
Board is determined to carry on consistently working towards success.”
2011 in figures
In 2011, the Lufthansa Groups revenue totalled EUR 28.7bn – an increase of 8.6 per cent on
the previous year. Traffic revenue improved by 10.8 per cent to EUR 23.8bn. Overall, the
Groups operating income went up to EUR 31.2bn in the reporting period, an increase of 6.7
per cent. Operating expenses rose by 9.3 per cent in 2011 to EUR 30.4bn. One of the main reasons
was the EUR 1.3bn rise in fuel costs, which came to EUR 6.3bn in total. This represents a
price and volume-driven increase of 26.4 per cent. This figure already includes a positive
hedging result of EUR 694m. Fees and charges were up 15.8 per cent on 2010.
The Lufthansa Group generated an operating profit of EUR 820m in 2011, down by EUR
200m in comparison with the previous year. Altogether the net result for the period was EUR
-13m. One year earlier, the Group posted a figure of EUR 1.1bn. The net loss includes a
negative valuation effect from changes in the time values of hedging transactions in line with
IAS 39 and the result of discontinued operations containing bmi. Earnings per share
consequently came to EUR -0.03.
Lufthansa invested EUR 2.6bn in the reporting period. Of this sum, EUR 2bn went on
expanding and modernising the fleet. Cash flow from operating activities came to EUR 2.4bn
and free cash flow (cash flow from operating activities less net capital expenditure) to EUR
713m. At the end of 2011, the Group had net debt of EUR 2.3bn. Its equity ratio was 28.6 per
cent.
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Source: Lufthansa
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