24-Mar-2006 9:12 AM
Lufthansa lifts operating profit to 577 million euros
Analysis
FRANKFURT (Lufthansa) - Dividend increased to 50 euro cents per share / Fares across Europe for 99 euros. "We aimed high in 2005 and have achieved more than expected - despite record oil prices," said Lufthansa CEO and Chairman Wolfgang Mayrhuber, presenting the Group's results for the year at a press conference in Frankfurt.
The Lufthansa Group increased operating profit in 2005 by 50 per cent to 577 million euros. "We are strategically well positioned and are operating successfully against tough competition. We are growing, we have become more profitable, and we have invested in future-promising products and quality."
All six business segments returned an operating profit. The leisure travel group Thomas Cook and the in-flight caterer LSG achieved the turnaround. Lufthansa is established on a firm financial footing and has further strengthened its balance sheet. The Group still commands substantial liquidity. Shareholders will also benefit from the year's good results: The Executive and Supervisory Board are to propose a per-share dividend of 0.50 euro (previous year: 0.30 euro) at the Annual General Meeting.
The Group's focus is still on the customer, said Mayrhuber. "Our strategy as a full-line provider is paying off. We lay on individual services for individual needs - purpose-designed for every requirement." With the introduction of the Lufthansa Private Jet Service, Lufthansa has expanded its à la carte portfolio of services designed to meet every need in the aviation industry. "Customers are full of praise for our Business Class, they are delighted with our service in First Class. Our premium strategy is vindicated by the figures," said the Chairman. The number of passengers flying First Class was up by 20 per cent last year. Lufthansa is also gaining ground in the bargain-fare segment, he observed.
Buoyed by the success of the "betterFly" discount fares offered initially out of Hamburg, that tariff concept is now to be extended to the whole of Germany. From 3 April, Lufthansa is to offer round-trip flights to all European destinations at the attractive price of 99 euros, including taxes and charges. "We are focusing more sharply this year on European traffic. Competition spurs us on. We face up to competition, whatever its origin." Lufthansa is also investing more in quality, Mayrhuber emphasised. Aircraft on short to medium-haul flights are being fitted out with new and more comfortable seats in both classes in the cabin.
The Lufthansa CEO and Chairman is highly satisfied with the integration of SWISS with Lufthansa. "Synergies are surfacing faster and to greater effect than we targeted. Customers of both airlines are profiting from the tie-up; their response is entirely positive". The Swiss carrier is expecting to break even this year and return a profit in 2007, the Chairman noted.
Improving and expanding the infrastructure remains a central issue for Lufthansa, Mayrhuber underlined. "We want the growth in air traffic to occur with us and here in Germany. That is the purpose of our involvement in the Air Traffic for Germany initiative, and of our investment in Munich and Frankfurt airports."
Lufthansa still attaches high priority to the cost cutting and efficiency improvement measures envisaged in its Action Plan. Within that plan, the Group achieved its target of improving results by 780 million euros in 2005. It will attain its ultimate target totalling 1.2 billion euros by the end of the year, Mayrhuber said. Even then, the Group must continue seeking additional cost-saving options. "Costs must fall, efficiency must rise further."
In the 2006 business year, the Executive Board is expecting an operating result at least on the level of the previous year. It is targeting an operating profit in the medium term of 1 billion euros by 2008.
The financial year 2005 in figures
In 2005 Lufthansa generated total revenue of 18.1 billion euros, which was 6.5 per cent more than in 2004. The Group's airlines pushed up their combined traffic revenue by 8.0 per cent to 13.9 billion euros. Successful capacity and sales management significantly raised average yields in passenger business (+3.5 per cent) and freight business (+10.8 per cent). Other operating income fell by 11.9 per cent to 1.5 billion euros. One reason for this was that the book profits of 331 million euros were 25.8 per cent lower than in 2004. Of this total, 182 million euros came from the sale of the remaining shareholding in Amadeus Global Travel Distribution S.A. and 107 million euros from the disposal of Loyalty Partner GmbH.
In 2005 operating expenses totalled 19.0 billion euros and were 6.5 per cent higher than in 2004. The year-on-year rise was mainly due to the dramatic surge in the price of kerosene. Fuel costs soared to a record peak of 2.7 billion euros; this was 843 million euros or 46.3 per cent more than in 2004. The fuel price hedging measures were once again very successful and yielded savings of 278 million euros.
Lufthansa lifted the operating profit in 2005 by 50.7 per cent to 577 million euros. The net result for the year after taxes likewise improved to 453 million euros, a year-on-year increase of 12.1 per cent.
Capital expenditure increased slightly to 1.8 billion euros and as in the past years was again fully funded from the cash flow, which expanded by 4.0 per cent to 2.0 billion euros.
At the end of 2005 the Group's liabilities were covered by liquid funds, with the balance showing net debt of 7 million euros.
Deutsche Lufthansa is a CAPA Member. For more information on the Centre for Asia Pacific Aviation's membership service, please click the icon below.
All six business segments returned an operating profit. The leisure travel group Thomas Cook and the in-flight caterer LSG achieved the turnaround. Lufthansa is established on a firm financial footing and has further strengthened its balance sheet. The Group still commands substantial liquidity. Shareholders will also benefit from the year's good results: The Executive and Supervisory Board are to propose a per-share dividend of 0.50 euro (previous year: 0.30 euro) at the Annual General Meeting.
The Group's focus is still on the customer, said Mayrhuber. "Our strategy as a full-line provider is paying off. We lay on individual services for individual needs - purpose-designed for every requirement." With the introduction of the Lufthansa Private Jet Service, Lufthansa has expanded its à la carte portfolio of services designed to meet every need in the aviation industry. "Customers are full of praise for our Business Class, they are delighted with our service in First Class. Our premium strategy is vindicated by the figures," said the Chairman. The number of passengers flying First Class was up by 20 per cent last year. Lufthansa is also gaining ground in the bargain-fare segment, he observed.
Buoyed by the success of the "betterFly" discount fares offered initially out of Hamburg, that tariff concept is now to be extended to the whole of Germany. From 3 April, Lufthansa is to offer round-trip flights to all European destinations at the attractive price of 99 euros, including taxes and charges. "We are focusing more sharply this year on European traffic. Competition spurs us on. We face up to competition, whatever its origin." Lufthansa is also investing more in quality, Mayrhuber emphasised. Aircraft on short to medium-haul flights are being fitted out with new and more comfortable seats in both classes in the cabin.
The Lufthansa CEO and Chairman is highly satisfied with the integration of SWISS with Lufthansa. "Synergies are surfacing faster and to greater effect than we targeted. Customers of both airlines are profiting from the tie-up; their response is entirely positive". The Swiss carrier is expecting to break even this year and return a profit in 2007, the Chairman noted.
Improving and expanding the infrastructure remains a central issue for Lufthansa, Mayrhuber underlined. "We want the growth in air traffic to occur with us and here in Germany. That is the purpose of our involvement in the Air Traffic for Germany initiative, and of our investment in Munich and Frankfurt airports."
Lufthansa still attaches high priority to the cost cutting and efficiency improvement measures envisaged in its Action Plan. Within that plan, the Group achieved its target of improving results by 780 million euros in 2005. It will attain its ultimate target totalling 1.2 billion euros by the end of the year, Mayrhuber said. Even then, the Group must continue seeking additional cost-saving options. "Costs must fall, efficiency must rise further."
In the 2006 business year, the Executive Board is expecting an operating result at least on the level of the previous year. It is targeting an operating profit in the medium term of 1 billion euros by 2008.
The financial year 2005 in figures
In 2005 Lufthansa generated total revenue of 18.1 billion euros, which was 6.5 per cent more than in 2004. The Group's airlines pushed up their combined traffic revenue by 8.0 per cent to 13.9 billion euros. Successful capacity and sales management significantly raised average yields in passenger business (+3.5 per cent) and freight business (+10.8 per cent). Other operating income fell by 11.9 per cent to 1.5 billion euros. One reason for this was that the book profits of 331 million euros were 25.8 per cent lower than in 2004. Of this total, 182 million euros came from the sale of the remaining shareholding in Amadeus Global Travel Distribution S.A. and 107 million euros from the disposal of Loyalty Partner GmbH.
In 2005 operating expenses totalled 19.0 billion euros and were 6.5 per cent higher than in 2004. The year-on-year rise was mainly due to the dramatic surge in the price of kerosene. Fuel costs soared to a record peak of 2.7 billion euros; this was 843 million euros or 46.3 per cent more than in 2004. The fuel price hedging measures were once again very successful and yielded savings of 278 million euros.
Lufthansa lifted the operating profit in 2005 by 50.7 per cent to 577 million euros. The net result for the year after taxes likewise improved to 453 million euros, a year-on-year increase of 12.1 per cent.
Capital expenditure increased slightly to 1.8 billion euros and as in the past years was again fully funded from the cash flow, which expanded by 4.0 per cent to 2.0 billion euros.
At the end of 2005 the Group's liabilities were covered by liquid funds, with the balance showing net debt of 7 million euros.
Deutsche Lufthansa is a CAPA Member. For more information on the Centre for Asia Pacific Aviation's membership service, please click the icon below.
