Lufthansa juggles more balls more quickly as it reports unchanged 1Q2013 operating loss

Lufthansa on 2-May-2013 reported a 1Q2013 operating loss of EUR359 million, an identical loss as in the same period in 2012. All the main business segments improved their operating result, but restructuring costs weighed on the group result.

The quarter was characterised by capacity cuts, yield and load factor increases, and restructuring aimed at future profit improvements. Labour unrest, never far from the surface, returned during the quarter. Recent union agreements have reduced the risk in this area, although talks with the pilot union are on-going.

Pricing was generally fairly healthy, with yield and load factor growing, but weakness was again apparent in Asia-Pacific. On the analyst conference call to discuss 1Q2013 earnings, Lufthansa CFO Simone Menne did not rule out the possibility of using new partnerships as a more offensive solution to Lufthansa's Asian problems, than the more defensive approach of capacity cuts and cabin mix changes.

Management will need to keep juggling these and other key issues - such as the 'new' Germanwings, office closures and headcount reductions - if it is to have a chance of reaching its FY2015 operating result target of EUR2.5 billion.