Lufthansa Technik has released its annual report for 2020 in which revenue and earnings were significantly lower than 2019 due to the effects of the COVID-19 pandemic on the aerospace sector. The crisis has had a considerable adverse effect on the development of the MRO business, with a significant decline in flight hours across the industry and financial pressure on the airlines leading to aircraft being grounded and decommissioned, which had a major impact on Lufthansa Technik.
Significant cost reductions are now being deployed to improve the company’s competitiveness and secure its long-term, defining role in the independent MRO market. As a consequence, instead of the previous eight company divisions, there will be only five in the future: Aircraft Component Services (ACS), Aircraft Maintenance Services (AMS), Engine Services (ENG), Original Equipment & Special Aircraft Services (OES) and Digital Fleet Services (DFS).
Revenue fell in the financial year 2020 by 43% to €3,747 million (previous year: €6,572 million) as a result of the CORONA crisis. This was mainly due to a significant decline in Europe, Lufthansa Technik’s most important sales market. Revenue with Lufthansa Group companies saw a decrease in volume, particularly in the engine business. Group external revenue decreased mainly in the component and engine maintenance divisions. Operating income of €4,184 million was 39% lower than in the previous year (previous year: €6,828 million).
Operating expenses fell by 30% in the reporting period to €4,502 million (previous year: €6,425 million) due to lower volumes and the cost-cutting measures implemented. Cost of materials and services decreased by 39% to €2,372 million (previous year: €3,902 million), primarily as a result of lower volumes. This included crisis-related write-downs of materials totaling €158 million. At €1,113 million, staff costs were 23% lower than in the previous year (€1,448 million), the main reason being the introduction of short-time work. Depreciation and amortization increased by 3 % to €197 million euros (previous year: €191 million).
Adjusted EBIT decreased accordingly to €-383 million (previous year: €463 million), and the adjusted EBIT margin decreased by 17.2 percentage points to -10.2 %. EBIT at the end of the reporting period was €-508 million (previous year: €472 million). The difference to the adjusted EBIT was mainly due to impairment losses on investments in joint ventures and on spare engines. Capital expenditure was reduced by 51% to €152 million compared to last year (previous year: €313 million), mainly due to lower investments into spare engines.
