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Lufthansa Group reports rise in net profit

LH Cargo results 2016FRANKFURT: March 16, 2017. The Lufthansa Group has reported a 4.6 rise in net profit to €1.77 billion in 2016 on a 1.2 percent drop in revenue to €31.66 billion.

EBIT rose 35.7 percent to €2.27 billion due to a one-off gain of €652 million following a new labor agreement with Lufthansa cabin staff.

After delaying the delivery of new aircraft, investments totaled €2.2 billion in 2016, some €300 million less than planned.

Commenting on the results CEO Carsten Spohr said the group was in a stronger position than a year ago but "it remains necessary to further reduce our costs. This is the only way to meet and master the decline in unit revenues and the higher fuel expenses, and at the same time to maintain and strengthen our financial stability and our investment capacities," he added.

Noting the passenger business "remains [the] earnings driver", Spohr reported an adjusted EBIT loss of €50 million for Lufthansa Cargo (LCG) in 2016 - compared to a positive €74 million EBIT the previous year - on an 11.5 percent fall in revenue to €2.08 billion (right).

"In a long-term comparison, this represents a very weak result for the Logistics segment," said the company.

Last year airfreight yields continued to decline due to "structural overcapacities in the market" and are expected to continue in 2017. As a result LCG will cut annual staff costs and related expenses at least €80 million by 2018. Last year it reached agreement with its works council to make 800 staff redundant at a cost of €32 million.

In a further bid to align costs with revenue, LCG will also take another MD11 freighter out of service this year leaving it with a fleet of 11 plus five B777Fs.

Since March last year LCG has been using the bellyholds of Eurowings' A330 long haul flights from Cologne to Varadero, Cancun, Dominican Republic, Phuket and Bangkok. A recent agreement with Etihad and air berlin to lease 33 aircraft for six years will increase the available belly capacity for sale.

"By integrating Eurowings' belly capacities, the services we provide our customers become all the more attractive," said Lufthansa head of Product & Sales Alexis von Hoensbroech, "Eurowings' growing network is an ideal complement to our previous connections."

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