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Lufthansa: Operating profit more than doubled

Lufthansa<.> performed soundly in the first quarter of 2002 amid a persistently difficult market environment, more than…

Lufthansa<.> performed soundly in the first quarter of 2002 amid a persistently difficult market environment, more than doubling its operating profit compared with the first quarter of 2001. It rose by Euro 7 million to Euro 12 million.

After the first three months it is already clear that Lufthansa`s strategy for managing the crisis and containing costs is paying off. The subdued growth of operating expenses yielded substantial financial savings.

Lufthansa had reacted promptly and resolutely to the slump in business following 11 September and the acute overall economic situation. The Group systematically adjusted capacity to demand, radically curtailed capital expenditure and carried out large-scale cost-cutting measures. In addition, Lufthansa agreed and implemented flexible working-time arrangements and salary concessions with the trade unions at short notice. All Lufthansa employees thereby made an important contribution to stabilising the Company`s commercial position and safeguarding its profitability. The success of these measures was already reflected in the first-quarter result.

In the Passenger Business segment Lufthansa managed to raise average yields by 1.2 per cent. The main reason for this was that the share of First and Business Class passengers in total business regained its accustomed level. Secondly, Lufthansa succeeded in holding its own in what was a difficult competitive setting while keeping prices relatively stable. The package of cost-cutting measures that was speedily adopted in September 2001 was rigorously implemented. One effect of this is that the Lufthansa Group`s capital spending fell sharply. As planned and announced, it contracted in the first quarter by 62.8 per cent to Euro 277 million. More than half of this total was spent on purchases of or advance payments on aircraft. All capital expenditure measures in the first quarter were funded in full out of the internally generated cash flow.

The Group`s overall revenue increased by 6.1 per cent to Euro 3.9 billion. Lufthansa Technik`s Maintenance, Repair and Overhaul segment pushed up its turnover by 2.1 per cent compared with the first quarter of 2001, expanding business with external clients by no less than 14.6 per cent. The Catering segment`s external sales surged by 349.3 per cent, mainly due to the first-time consolidation of the LSG Sky Chefs group in the USA.

The Lufthansa Group`s net indebtedness was likewise trimmed as scheduled. It de-creased to Euro 3.5 billion (end-2001: Euro 3.8 billion). In the first three months of last year it had amounted to Euro 1.7 billion. This year Lufthansa is focusing its attention on maximising the cash flow remaining within the Company with a view to reducing its net debt further.

First full-year forecast at AGM

It is not possible at the moment to make a realistic earnings forecast for 2002 as a whole. The Group intends to do this at the Annual General Meeting in Cologne on 19 June. As long as no further political or terrorist events impede the economic upturn, Lufthansa an-ticipates a distinctly better operating result in 2002 than in 2001.