SWISS

Lufthansa 1Q2012 operating loss widens as crown-jewel subsidiary SWISS sinks into the red

Lufthansa Group will have to seriously score with its SCORE “Change for Success” restructuring programme to keep its position as Europe’s most profitable airline group after it incurred a consolidated EUR381 million operating loss for 1Q2012. Although 1Q is a seasonally weak quarter, the loss from operating activities in the first three months of 2012 deepened 125% from the EUR169 million operating loss posted in 1Q2011. The group’s net loss reduced 22% year-on-year, to EUR397 million from EUR507 million in the year-ago period, when results were negatively affected by changes in present value of hedging options.

The group had a negative operating margin of 5.6% in 1Q2012, a deterioration of 3.2 ppt compared to 1Q2011.

The worse than expected financial performance is indicative of the dire operating environment in Europe. Denmark’s Cimber Sterling Group filed for bankruptcy on 3-May-2012 following on the demise of Spanair in Jan-2012 and Malevin Feb-2012.

Lufthansa earnings fall 27% as outlook deteriorates further

Germany’s Lufthansa Group, Europe’s largest airline group by revenue, reported a 27% drop in third quarter (three months to 30-Sep-2011) operating profit as “the macroeconomic environment darkened significantly” in the period. The group warned the economic gloom is showing no signs of abating and due to an ugly forward bookings profile, Lufthansa is again slashing future capacity plans.

The airline breathed a sigh of relief as the third quarter result pushes the airline back firmly into the black in the YTD period. Although the result “does not have us jumping for joy,” CEO Christoph Franz said, Lufthansa is profitable while many “competitors are struggling to make figures that are not in the red”.

Emirates and Lufthansa growing strongly this summer: World's biggest airlines rankings for August

Lufthansa and Emirates are the fastest growing carriers of the global top ten, increasing their capacity (ASKs) by 12.4% and 8.1% year-on-year, respectively. Delta remains the world's leading carrier by this measure, followed by American Airlines and United Airlines. Combined, United-Continental is roughly 3.3% bigger than Delta by systemwide ASKs.

European airlines report single-digit traffic growth in 2010; profits remain weak

European airlines reported single-digit growth last year - a welcome improvement from 2009's depressed level - but 2010 was a lacklustre year overall. Full year data has been released by the Association of European Airlines (AEA), the European Low Fares Airline Association (ELFAA) and EUROCONTROL. As noted by EUROCONTROL, growth across the continent last year was driven mainly by LCCs.