“The Lufthansa Group is back on track”, said Carsten Spohr, CEO of Deutsche Lufthansa AG, when the group, consisting of Swiss, Austrian Airlines, Brussels Airlines, Eurowings and Lufthansa, announced its first quarter revenues for this year. Despite reporting a net loss of €467 million, the company has a positive outlook for the year ahead, expecting a “travel boom” in the summer. “After a good first quarter in which we were able to significantly improve our result, we now expect a travel boom in the summer as well as a new record in our traffic revenue for the year as a whole”, Spohr explained.
1. Result First Quarter 2023
Despite the loss, the Lufthansa Group significantly improved its result in the first quarter of 2023 compared with the previous year. This was due to the continued high demand for flight tickets – especially in the private travel segment. Pent-up demand following the Corona pandemic remains high as the high booking inflow for the summer months in the first quarter of the year clearly demonstrates.
The Group result for the first three months is still negative mainly due to normal seasonality, the company explained, this year seasonality being even exacerbated by the faster recovery in the private travel segment compared to the business travel segment. Costs for the planned expansion of flight operations in the summer, investments in operational stability and the effects of various strikes at German airports also weighed on earnings. However, the operating loss was halved compared to the previous year.
The Group increased its revenues by 40% to €7 billion, compared to the €5 billion in the previous year. The Adjusted earnings before interest and taxes (EBIT) was €-273 million, compared to the €-577 million in 2022, and significantly better than the €-336 million in the first quarter of 2019. The net loss also decreased by 20% to €-467 million compared to last year’s €-584 million.
2. Group airlines improve result
During the first quarter, significantly more people flew with the airlines of the Lufthansa Group than in the previous year. In total, the airlines of the Lufthansa Group welcomed 22 million passengers on board between January and March (previous year: 13 million). Capacity was expanded to 75% of the pre-crisis level in 2019 due to sustained high demand and was thereby 30% above the previous year’s level in the first quarter.
Passenger airline revenue rose by 73% in the first quarter to €5.2 billion (previous year: €3 billion). In particular, the development of yields, which were 19% higher in the first quarter than in 2019, demonstrate the strength of demand. On long-haul routes, yields increased by as much as 25%. However, due to seasonality and the preparations for the expansion of flight operations in the summer months, the result was negative. The Group passenger airlines generated an Adjusted EBIT of €-512 million in the first quarter of 2023 (previous year: €-1.1 billion).
3. Outlook
The desire to travel remains strong. Catch-up effects after the pandemic are still clearly noticeable. The company therefore expects a very strong travel summer, especially for private travel. The most popular vacation destination in the summer is once again Spain. However, interest in city breaks and short trips is also growing significantly. Demand in the premium classes especially remains strong.
The continuously strong demand gives us confidence for the coming months. The summer travel season will provide a major contribution to achieving our targets for 2023.
Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG
“We will continue to invest in operational stability to offer our customers a smooth travel experience, even if this means that we are currently operating at a much lower efficiency and productivity level than originally planned. I am all the more convinced that we still have great potential to increase our earnings beyond 2023 once we leave the ramp-up phase behind us and the overall system gains further stability”, said Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG.
In the second quarter, capacity is expected to increase to around 82% of the pre-crisis level. Based on the current booking situation, the company expects yields in this period to be up to 25% higher than in 2019. Adjusted EBIT in the second quarter of 2023 is thus expected to be higher than the second quarter result of 2019, which amounted to €754 million.
For the full year 2023, the Lufthansa Group expects an average passenger airline capacity of around 85 to 90% compared to 2019.
