Lufthansa's 1Q2014 losses narrow, but its new CEO has a busy agenda, with helpful partners scarce

Lufthansa reported narrower losses in 1Q2014, although the underlying improvement in the operating result (adjusted for one-off costs and a changed depreciation policy) was only slight. Unit costs fell as expected, but unit revenues were also down. The improved group result owed much to lower fuel costs and contributions from ground-based activities such as MRO.

The seasonally weak 1Q result is not usually much of a guide to the full year for European airlines. This time, 1Q was further weakened by airport strike action and the move of Easter into 2Q. The Group's FY2014 profit targets remain unchanged, in spite of a pilot strike early in 2Q2014, helped in part by a lower fuel cost outlook. However, the headroom in the targets is narrowing. Cost restructuring remains on track and so unit revenues will probably be the key to the full year result.

New Group CEO Carsten Spohr replaced Christoph Franz at the helm on 1-May-2015. He will want to ensure that he does not have to preside over any reduction in profit targets, while also attending to a range of other key issues.