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May 30, 2024
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The war in Ukraine is the new uncertainty, but if the effects on the industry remain limited, Lufthansa Group is expecting a strong 2022. The airline group sees very strong bookings for the second quarter and summer. By hedging a large part of its fuel costs, it should be well-protected against the cost inflation, Lufthansa said on March 3 during the presentation of its 2021 results. Lufthansa Group counting on a very strong 2022.

CEO Carsten Spohr started with some remarks on the situation in Ukraine: “On a normal Thursday in March, we would have carried some 4.000 passengers to Kyiv and Moscow. But unfortunately, this isn’t a normal Thursday. Our short-haul aircraft used on these routes are on the ground and long-haul aircraft are up to fifteen hours in the air to circumvent Russian airspace on their way to Asia. This is another challenge, a risk for the entire world economy.”

Russia and Ukraine contribute to Lufthansa’s revenues by only one percent and Asia – still largely closed – by just two. But oil prices and rerouting result in additional costs that will translate into higher ticket prices. Following the EU sanctions on Russia, Lufthansa Technik has suspended its technical support to Russian customers. For now, it will keep spare parts in its warehouses in Russia.

Reduced losses in 2021

Lufthansa Group significantly reduced its losses in 2021, reporting a net result of €-2.191 billion compared to €-6.725 billion in 2020. This makes it the best performing legacy carrier in Europe, with both Air France-KLM and IAG reporting losses of around three billion euros. “The past two years were not for the faint-hearted. That we successfully survived these years is a confirmation of the strength of Lufthansa”, said Spohr.

Adjusted EBIT including €581 million in restructuring costs was €-2.349 billion versus €-5.451 billion. In Q4, Adjusted EBIT was €304 million, with a net loss of €314 million. Group revenues for the full year ended at €16.8 billion, up from €13.6 billion. The summer was the turning point when demand fully picked up which helped stop the outflow of cash. Adjusted free cash flow was €-855 million or only €-45 million if a deferred tax payment is excluded.

The network airlines produced a full-year Adjusted EBIT of €-3.486 billion with €8.376 billion in revenues and operated at forty percent capacity. Yields in long-haul exceeded those of 2019 but were still lower in short-haul. All airlines combined carried 47 million passengers, up 29 percent from 2020.

Results by airline

The Adjusted EBIT of Lufthansa was €-2.616 billion compared to €-3.386 billion in 2020, with revenues up 23 percent to €5.061 billion from €4.104 billion. The parent airline carried 23.5 million passengers, up from eighteen million in the previous year. Capacity was up by 29 percent, but yields were slightly down as a reduction of business travel on short-haul flights wasn’t fully compensated by higher leisure revenues.

SWISS and Edelweiss reported a €-417 million Adjusted EBIT, an improvement from €-689 million in 2020. Revenues were €2.098 billion from €1.732 billion. At 7.1 million, the airline carried 26 percent more passengers, while capacity increased by 23 percent. The carrier ended the year with a positive cash flow. The transformation plan that started in 2021 has already brought comprehensive cost savings.

Austrian Airlines reduced its negative Adjusted EBIT to €-264 million from €-321 million and increased its revenues to €743 million from €460 million. Passengers carried was up 61 percent to five million, thanks to a capacity increase of 59 percent. Yields improved by 4.5 percent. But overall, 2021 was heavily impacted by lockdowns in Austria that curtailed travel. Despite the lockdown, Austrian’s domestic operations contributed positively to the results. 

Brussels Airlines suffered from the Belgium travel ban in Q1 last year but hopes to recover to eighty percent capacity this summer. (Brussels Airlines)

Brussels Airlines reported an Adjusted EBIT of €-189 million versus €-293 million in 2020. Revenues ended at €560 million, up from €414 million. The Belgian airline carried 3.5 million passengers, an increase of 47 percent, partly thanks to the increased focus on the market in West Africa but only after a travel ban was lifted in April. The carrier benefitted from the successful restructuring measures under the Reboot Plus-plan, including the reduction of its staff by twenty percent. The carrier phased out two A330s and eight A320s.

Leisure airline Eurowings produced an Adjusted EBIT of €-230 million, an improvement from the previous year’s €-703 million. Revenues were up to €822 million from €598 million. It carried 7.8 million passengers, only eight percent more. It gradually build up capacity during the year from ten percent in Q1 to seventy percent in Q4, with capacity up by 36 percent. Eurowings’ operating expenses were twelve percent down on those in 2020, the effect of restructuring measures and cost reductions on maintenance and the wet lease of aircraft, and an improvement in productivity. This brought unit costs almost in line with those of 2019.

Record results at Cargo

Lufthansa Cargo produced record results in 2021, with an Adjusted EBIT of €1.493 billion, up from €772 million in the previous year. Revenues were €3.8 billion, up from €2.757 billion. It benefitted from the continued constraints on the freight market that pushed yields up by 25.9 percent to €50.6. Net traffic revenues were the highest on flights to North America and Asia/Pacific, both regions accounting for ninety percent of traffic. Revenue cargo tonnes kilometers was 7.198 million.

Lufthansa Cargo operated eleven full-freighters, all Boeing 777Fs at the end of the year after the last McDonnell-Douglas MD-11F was retired. The Logistics unit also leaned on the capacity of twenty 777Fs with AeroLogic. Total capacity was nine percent higher, but belly capacity in passenger aircraft gradually recovered.

Lufthansa Technik also improved its results, with an Adjusted EBIT of €210 million, up from €-383 million in 2020. Revenues increased seven percent to €4.0 billion. The improvement comes from the recovery of flight hours to eighty percent of pre-crisis levels, resulting in more maintenance, repairs, and overhaul. The effects of the restructuring program that includes staff (700) and other reductions (including the closure of six stations in Germany) contributed to the result.
Catering business LSG produced a €27 million Adjusted EBIT, up from €-284 million. Revenues were fifteen percent down to €1.1 billion, the effect of the sale of LSG’s European unit.

Restructuring 75 percent complete

The restructuring across Lufthansa Group that started in June 2020 continued in 2021. The total workforce has been reduced by 30.000 to 105.000 thanks to voluntary leave programs. Some €2.7 billion in structural cost reductions have been implemented, which is 75 percent of the €3.5 billion target set for 2024. The main contributors have been reduced personnel costs, higher productivity, improved processes, fleet modernization, and strong results at Cargo. The divestment of more business units that aren’t part of the core business is considered, including the remainder of LSG, AirPlus, and with preparations underway for a partial carving out or IPO of Lufthansa Technik in 2023.

Chief Financial Officer Remco Steenbergen outlined that the work isn’t completed yet. Of the €3.5 billion targeted for 2024, €1.8 billion must come from labor costs, of which €1.3 billion has already been implemented. Compared to 2019, ground staff numbers are down by 28.400, cabin crews by 4.200, and cockpit crew by 400. An additional 400 pilots from the long-haul fleet will leave the company later this year, with plans for further redundancies of more first officers being prepared. The airline recently negotiated a new contract to reduce working hours for pilots that prevents further job cuts. “From our point of view, there is no question that future collective agreements must reflect the structural changes in our industry”, said Steenbergen. Units must come down by low to mid-single-digit percentage rates by 2024, he added.

Until January 1, 7.000 staff had already left the group with another 3.000 having signed to leave until 2024. This reduces personnel costs by ten percent or one billion to €7.8 billion, but eventually, staff costs should be down by 15-20 percent.
At the same time, Eurowings has started rehiring 750 pilots and flight attendants. Spohr said that Lufthansa within the next few weeks will begin pilot training again, with the first crew to graduate in 2024. Right now, Spohr said it is too early to project the size of Lufthansa’s workforce in 2024, but he wants to continue to have the flexibility.

Boeing 787-9 Lufthansa

Lufthansa still hopes to take delivery of its first Boeing 787-9 in Q2, but that’s not confirmed. (Lufthansa)

Strong liquidity position

By the end of last year, Lufthansa repaid all of the €5.5 billion it received in silent participation of the German government since 2020, thanks to a €2.2 billion capital increase in October. It issued six bonds, repaid a €1.0 billion loan from KfW, concluded the financing for twenty aircraft, and secured €3.0 billion in maturing liabilities. More work is in progress, as Lufthansa plans to substitute existing credit lines with a larger syndicated credit facility, adding financial flexibility and improving the efficiency of its balance sheet.

The Group ended the year with €9.4 billion in liquidity, higher than the €6-8 billion target it provided as guidance in Q3. Chief Financial Officer Remco Steenbergen said that it hasn’t been decided how the group will benefit from this surplus in liquidity, but it is likely that part of it will be directed to repaying loans to the Austrian, Swiss, and Belgian governments. Austrian has already repaid €60 million of the €300 million in state-secured loans it received since 2020. The capital increase helped to decrease net debt by €0.9 billion to €9.0 billion.

Looking for more any surplus A350s, 787s, and A320neo’s 

Spohr is still counting on Boeing to deliver its first of 25 787-9s in the second quarter, although the US airframer still has to get approval from the FAA to restart deliveries. Lufthansa Group has firm orders for 175 aircraft until 2029, of which 74 widebodies and 101 narrowbodies. He isn’t too worried if delivery of the first Boeing 777-9 might slip again by a few weeks or months beyond late 2023. The type is too important for Lufthansa in its long-term fleet plan to cancel the order for twenty firm plus 24 options, something that Emirates has recently threatened to do.

Carsten Spohr said Lufthansa is in contact with Airbus and Boeing for any opportunities to source additional A350s and 787s that can’t be delivered to Russian airlines. “We look if we, as one of the few airlines that can afford it, can have aircraft at favorable terms and conditions. We look at aircraft types that are useful for us, like the 787 and A350, but we will also have a need for more A320s in the next few years. And we are happy with freighters, so if 777Fs become available in good condition, we will also have a look.” As AirInsight reported, Aeroflot has thirteen A350s of order and lessors some forty narrowbodies for Russian customers. No Russian airline has the 787 on order. Lufthansa already sourced five 787s on favorable terms in January 2021 

Lufthansa Group will continue to upgrade its cabin products, rolling out more of the new Premium Economy seats that were introduced with SWISS. A new Business Class product will be introduced from 2023 on the 787, Airbus A350, and 777-9, but as a retrofit on the 747-8I and the oldest A350s.   

It’s too early to predict the fleet size in two years’ time, said Spohr. “It’s about flexibility. There are so many uncertainties right now. Before the Covid crisis, we had over 800 aircraft, this summer we will have 650 active. I can imagine it will be 700-710 next summer and then maybe back to between 700 and 800 in 2024.”


Omicron in January and February will make for a loss-making first quarter, but in its outlook for 2022, Lufthansa expects to recover capacity from sixty percent in Q1 to around 85 percent this summer for the combined short and long-haul network, but short-haul should even get to 95 percent. Lufthansa is offering over 120 leisure destinations this summer, which together with the Transatlantic should lead the recovery. Full-year capacity is expected to be on average seventy or 85 percent for short-haul. SWISS and Brussels Airlines plan to ramp up to eighty percent capacity. Austrian is offering twenty percent more European tourist destinations than in 2019, or 110 in total.

Costs will be rising on most fronts, but Lufthansa has protected fuel costs for 74 percent this quarter and for 63 percent for the full year, with an average price of $63. That is significantly below current market prices of over $100 per barrel. Despite this, fares will have to rise within the industry, not just because of higher fuel prices but also as inflation is rising.  

The Adjusted EBIT for Q1 will be negative, but operating results should improve after that, with a projected margin of eight percent. “But we cannot foresee have the current Ukraine conflict will affect demand and the economic environment in 2022. That’s why we cannot guide for the full year”, said Remco Steenbergen.

author avatar
Richard Schuurman
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016. Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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