FIRST quarter earnings of Germany’s flag carrier has descended into red, but the airline is adamant it will still achieve its set targets by year-end.
Lufthansa said in a statement that it drew a net loss of 8 million euros (US$9.2 million) in Q1, a stark contrast to the 425 million euros in profit gained compared to the same period in 2015.
According to the company’s CFO Simone Menne, revenues for the first quarter slipped by 0.8 per cent to 6.9 billion euros as a result of “significant pricing pressures” faced by the group’s passenger airlines and the cargo businesses.
But Menne assured that “the substantial unit cost reduction at our passenger airlines has more than made up for the pricing declines.”
She adds: “We are not just benefiting from further fuel cost reductions and non-recurring effects. We have also improved our operating cost structure. This marks an important change in trend in our unit cost development.”
Hence, the group is keeping its full-year forecasts unchanged, predicting an adjusted EBIT (earnings before interest and tax) that is “slightly above” the previous year’s 1.8 billion euros.
The forecast does not, however, include the negative impacts of possible strike actions, the company stated.
Last year, the German carrier was hit by both pilots and cabin crew strikes. This consequently resulted in a “significant” amount of earnings lost for the first quarter of this year, admitted Heiko Brix, regional director South-east Asia at Lufthansa.
When asked about the suspension of the airline’s Kuala Lumpur-Frankfurt route in February, Brix said: “We did not like terminating the service but we are perfectly covering it with our Singapore Airlines codeshare now.”
Instead, Lufthansa will be directing their efforts, at least for the rest of this year, into improving their products and increasing their capacity with new aircrafts, added Brix.
“As soon as the joint venture (with Singapore Airlines) is on track, we will then have the opportunity to grow and improve our network, which is of course the goal of any airline,” he said.
