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Lufthansa holds the course during industry crisis

21st November 2008 Print
The Lufthansa Group increased its offer and sales during the first nine months of the year, defying the difficult economic environment. The Group achieved an operating profit of 984 million euros after the third quarter. This was equivalent to a lesser result of 101 million euros in comparison with the same period the previous year.

The net profit for the term was reported at 551 million euros; during the same period last year this figure was at 1.6 billion euros; however, it included 503 million euros of profit from the sale of the shares in Thomas Cook, as well as book gains of 82 million euros from the repurchase of own stock by WAM Akquisition S.A.

“This is a respectable result taking into consideration the considerable strains being felt as a result of the ongoing crisis in the financial markets and the overall economic situation. During these critical times, our focus is naturally on safeguarding our result. We possess the necessary flexibility and operational adaptability, and will be able to steer our company according to the demands of the market.

“In addition, we are working on our productivity, our measures to improve fuel consumption and the reduction of external costs. All of these factors and the outstanding team performance by the Group’s employees contribute to stability and offer us the opportunity to thrust forward into new openings”, commented Lufthansa Chairman and CEO Wolfgang Mayrhuber, speaking at the presentation of the third-quarter.

Whereas the worldwide economic slowdown has particularly been felt in the Passenger and Catering business segments, the operating results of the remaining Logistics, MRO and IT Services business segments have developed positively.

In the Passenger Business segment, the sharp rise in fuel costs and strike-related losses, as well as the decline in demand caused by the state of the world economy, all had negative influences on the result. However, the attractive premium products, the selective expansion of the route network and the successful integration of SWISS all played decisive roles in ensuring sales growth in comparison with the same period last year.

Mayrhuber stressed that: “We will continue to work on improving our offer with the expansion of our airline system and with our strong alliances. Crises are often the starting points for structural changes and we want to seize the opportunities that will present themselves to us in this situation to ensure the long-term consolidation of our position, whilst still maintaining our financial basis.”

Mayrhuber went on to add that a modular system of essentially independent airlines with their own specific markets would be the concept of the future to join as many European markets as possible with the best possible results.

The Logistics business segment achieved a significant rise in revenue and an improved operating result during the first nine months of the year. In the MRO business segment, cost reduction and efficiency improving measures resulted in a year-on-year rise in the operating result. The IT Services business segment was also able to profit from targeted cost management and achieved a significantly improved operating result. The Catering business segment was confronted with a negative exchange rate, a rise in material costs and one-off effects, and was consequently unable to reach the previous year’s good operating result.

Mayrhuber underlined that Lufthansa was well-equipped to deal with the future and stated that: “Lufthansa stands for reliability and works with foresight, particularly in a difficult economic environment. We keep an eye on maintaining a solid balance sheet, we maintain our financial and operational flexibility, we offer what we can also sell and we invest where it makes sense.

“We are capable of something that many competitors are not: we are capable of mastering crises whilst still remaining profitable and strong, and maintaining the attractiveness of our company for our shareholders, customers and employees.” The Lufthansa Chairman and CEO stressed that the measures that had been introduced to ensure the stabilization of the result and strict cost management would continue to grow in importance.

Altogether, the Executive Board expect the full-year revenues for 2008 to be above those of the previous year. Based on its current knowledge, the Group forecasts an operating result of 1.1 billion euros. However, this forecast is subject to the opportunities and risks associated with the major fluctuations to be expected from the influencing factors of the overall economic situation.