Lufthansa Group’s balance sheet presentation in Frankfurt on Thursday, March 7, revealed not only the successful recovery from the pandemic, but also the challenges that lie ahead for the company. The positive aspects include a Group net profit of €1.7 billion, a 15% increase in revenue to €35.4 billion and an adjusted EBIT of €2.7 billion, representing a 76% increase from the previous year. The resumption of dividends also added to the positive mood.
However, challenges loom on the horizon, as ongoing strikes by ground staff and the recent strike notice by cabin crew at Lufthansa and its subsidiary Cityline suggest turbulence ahead. Despite the strong recovery, the company faces uncertainties in the future.
The forecast indicates a significant increase in revenue, but adjusted earnings are expected to remain at the 2023 level, leading to a decline in profit margins. This cautious outlook, coupled with recent strikes, has resulted in a 16% decline in Lufthansa shares since December, although there were gains in pre-market trading on Thursday.
Challenges such as demands for substantial wage increases in the face of high inflation, ongoing strikes and the hiring of around 1,000 new employees per month are creating new pressures. Personnel expenses rose by 15% to €8.3 billion last year, surpassing even fuel costs.
The presentation also emphasised that Lufthansa is at a critical juncture, where managing labour costs while ensuring service quality will be crucial for long-term competitiveness. Overcoming internal challenges and adapting to external market changes are vital for the company’s future success. (£1.00 = €1.17 at time of publication).
