Tariffs – Berlin – Despite the strikes and chaos: Lufthansa on the profit – Economics course

Frankfurt am Main (dpa) – Despite the constant threat of strikes and chaos in airport service, Lufthansa has returned to profitability. While the company delegations and Verdi were just meters away fighting for a collective agreement for ground staff, Lufthansa boss Carsten Spohr announced the first annual operating profit since the outbreak of the Corona crisis. The group, which has just been rescued by the state, now expects a profit (adjusted EBIT) of over half a billion euros this year. In 2021, Lufthansa lost more than 2.3 billion euros in this key figure.

Despite a return to profitability, Lufthansa is holding back for 2023. The bottom line is to stabilize operations and make them more reliable for customers, Spohr said on Thursday in Frankfurt. After experiencing this summer of chaos, MDax is looking to offer 85 to 90 percent of its pre-crisis program for the coming year. This year, after Corona’s spring stagnation and several flight cancellations in the summer, around 75% will be released.

Due to high energy bills and inflation, he cannot imagine private demand holding up as it has been so far, Spohr said. However, the opening of the Japanese and Chinese markets and the return of business travelers will have a positive effect. Customers need to be prepared for much higher prices, which Spohr believes may rise more than the overall price trends. “Travel and flying will become more expensive,” said the Lufthansa CEO. Due to the delayed delivery of new aircraft, the high price phase could last several years as competitors are also unable to build up the additional capacity.

Spohr was optimistic that collective bargaining conflicts, especially within the main Lufthansa company, could be resolved. However, negotiations regarding Lufthansa’s ground staff initially failed. The Verdi union and company continued talks at the Frankfurt airport hotel on Thursday afternoon. There was no sign of a solution or successful conclusion.

Spohr expressed his understanding for the resentment of employees “after two and a half very hard years” https://www.sueddeutsche.de/wirtschaft/ “The burden was simply enormous.” He offered the pilots of the main Lufthansa brand who were ready to strike to renew the fleet pledge, which had meanwhile been canceled. By the end of last year, 325 of the more than 700 aircraft in the group’s fleet could only be operated by pilots paid under the group’s wage agreement. There is also agreement with the Cockpit Association on the goal of favoring the lower wage groups in particular.

When it comes to staff, the crane appears to be over-saving as Spohr had previously admitted. Of the good 140,000 employees before Corona, 106,000 were still on board at the end of June. Many units are operating at full capacity this summer and an additional 5,000 people are planned to be employed this year. Lufthansa also wants to create 5,000 additional jobs in the coming year – especially in airplanes, for ground staff and in technology. During the warning strike, Verdi always called for help through new employees.

The maintenance chaos cost the group’s airlines € 158 million in spring to pay for replacement flights or hotels and passenger compensation. This year, a total of EUR 450 to 500 million has been planned for this. Verdi’s strike last Wednesday, which resulted in the cancellation of more than 1,000 flights, cost around 35 million euros, CFO Remco Steenbergen said. In view of the growing average profitability, however, this group dealt with it easier. Lufthansa earned 24 percent in the second quarter. more for a ticket than a year ago, and compared to the pre-crisis 2019 it was still 10 percent.

Like other European airlines, Lufthansa was able to return to profitability in the months April-June. The Group’s sales increased from EUR 3.2 billion to almost EUR 8.5 billion. Operating profit (adjusted EBIT) reached EUR 393 million after minus EUR 827 million in the pandemic period of the previous year. The bottom line is that Lufthansa made € 259 million after losing € 756 million a year earlier. It was the first net profit since the beginning of the corona crisis.

The passenger business grew, but was not yet enough to make a profit. Passenger numbers quadrupled to around 29 million. The fact that Lufthansa is back in the group as a whole is mainly due to the freight business: Lufthansa Cargo alone generated an operating profit of almost half a billion euros in the second quarter. Spohr also relies on the Freight Transport division in its profit forecast for 2022: Cargo, which is operating at full capacity, is expected to roughly repeat its record operating profit of almost 1.5 billion euros from 2021 including year.

© dpa-infocom, dpa: 220804-99-269609 / 4

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