Rising fuel costs and overcapacity see Lufthansa post first-quarter loss

Lufthansa Group’s Adjusted EBIT declined to €-336 million in the first quarter of 2019 compared to €52 million for the first quarter of 2018, despite a 3 percent increase in total revenue of €7.9 billion for the quarter compared to 2018 figures.  Adjusted EBIT was reduced by a EUR 202 million rise in fuel costs. According to the Group, the negative trend was accentuated by the fact that first-quarter results for 2018 had been particularly strong, owing to the capacity reductions deriving from Air Berlin’s demise. On this basis, the Lufthansa Group’s Network Airlines suffered a 5.2-percent currency-adjusted decline in their unit revenues for the period. The unit revenue decline at Eurowings, with its higher proportion of short- and medium-haul routes, amounted to 8.5 percent. First-quarter unit costs (ex fuel) decreased 0.8% percent at the Network Airlines and 7.2 percent at Eurowings, both on a currency-adjusted basis.

On a preliminary basis, the Network Airlines achieved an Adjusted EBIT of €-160 million (prior year: €128 million) for the first quarter of 2019, while Eurowings saw its Adjusted EBIT for the period decline to €-257 million (prior year: €-212 million). First-quarter Adjusted EBIT for Lufthansa Cargo amounted to €24 million (prior year: €72 million), a 67-percent decline that is attributable to downward airfreight market trends, especially on routes between Europe and Asia. Lufthansa Technik reports a first-quarter Adjusted EBIT of €125 million (prior year: €107 million), while LSG achieved an Adjusted EBIT for the period of €2 million (prior year: €1 million). Adjusted EBIT for the Other Businesses amounted to €-59 million (prior year: €-29 million).

“We are seeing good booking levels for the quarter ahead,” says Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.” (€1.00 = US$1.13 at time of publication.)