Lufthansa remains on course after the first half of 2008


Lufthansa (the “Group”) remains on course with an improved operating result – during the first six months of 2008, the Group increased its offer and sales. The Group improved its operating result to 705 million euros, which marked an increase of 219 million euros in comparison with the first six months of 2007. The newly-consolidated SWISS contributed a share of 157 million euros. The net profit for the period was reported at 402 million euros; during the same period last year this figure was at 992 million euros; however, it included book gains of 503 million euros from the sale of the Thomas Cook stake, as well as 71 million euros from the share buy-back by WAM Acquisition S.A.

“The result is a strong performance in a highly-challenging environment. It marks the reward for the hard work that has been invested by all of the Lufthanseats and all of the Group’s companies, such as SWISS. It is the result of careful precautions,” commented Lufthansa chairman and CEO Wolfgang Mayrhuber, speaking at the presentation of the first-half results.

All the business segments of the Lufthansa Group contributed to the improved result with their positive and partly even increased operating profit. In the Passenger Business segment, the exorbitant increase in fuel costs and the restrained demand in certain markets had a negative influence on the result. Therefore, it is pleasing that sales in this segment could be increased in spite of the considerable burden placed on it by the world economy.

The attractive premium products, the selective expansion of the offer and the successful integration of SWISS all played decisive roles in ensuring this success. Mayrhuber stressed that with the current difficult market environment that was already causing many airlines to cancel schedules and significantly reduce their fleet and personnel capacities, the time is now more right than ever to focus on the things that one is actually in control of.

Besides the quality, these include particularly efficiency, internal costs, flexibility and provisions, for example, in the form of fuel price hedging. The Logistics business segment also achieved a significant rise in revenue and an improved operating result during the first six months of the year. The MRO business segment was also able to achieve growth and increase its contribution to the result. The result of the Catering business segment was on par with the previous year’s result. The IT Services business segment was able to profit from targeted cost management.

Commenting on the future development of the Group, Mayrhuber underlined that, “Rhe undoubtedly very good first-half result should not allow us to lose sight of the major challenges that lie ahead. Our company has the great opportunity to emerge relatively stronger from the increasingly difficult market and competition situation that we find ourselves in. We have laid the foundations and will not jeopardize our future. We have shown in the past that we are prepared for these kinds of situations and are capable of reacting to them. Our financial strength and operating adaptability will grant us the opportunity to remain profitable and strong, and to continue to make our company more attractive for our shareholders, customers and employees.”

The Lufthansa chairman and CEO remains confident that these abilities to implement a goal-oriented response, result-oriented management and additional cost limiting measures will not be in vain. Consequently Lufthansa continues to expect that for the full year 2008, it will follow up on last year’s operating result. The risks lie in the renewed and prolonged increase of the fuel prices, the continued downturn in economic growth or the implications of possible further strikes that are not yet foreseeable and costs as a result of the ongoing wage negotiations.

First-half figures 2008

During the first six months of 2008, the Lufthansa Group generated revenues totalling 12.1 billion euros, a year-on-year increase of 19.5 per cent. The traffic revenue rose by 25.6 per cent to 9.7 billion euros. This was mainly due to the increased passenger figures with currency adjusted higher average yields in the Passenger Transportation business segment and the full consolidation of SWISS. During the first half of 2008, the operating income increased by altogether 19,1 per cent to 12.9 billion euros.

Operating expenses rose to 12.1 billion euros during the first half of 2008, mainly as a result of the rise in fuel costs. This was due to price and quantity-related factors, as well as changes in the group of consolidated companies.

The operating result improved by 219 million euros to 705 million euros during the first six months. The Group posted a net profit of 402 million euros. In 2007, this position included book gains from the sale of the Thomas Cook stake and the share buy-back by WAM Acquisition S.A.

Lufthansa’s capital expenditure during the reporting period totalled 1.2 billion euros, of which 765 million euros were spent on the expansion and modernization of the fleet and 214 million euros were spent on the acquisition of a 19 per cent stake in the JetBlue Airways Corporation on 22 January 2008. The cash flow from operating activities amounted to 1.8 billion euros. The Group’s net liquidity stood at 916 million euros at the end of the first half of 2008.