Lufthansa 2018 profit down 7.6pc to US$2.5 billion as revenue rises 6pc

GERMANY's Lufthansa Group's 2018 net profit declined 7

18 March 2019 - 19:00

GERMANY's Lufthansa Group's 2018 net profit declined 7.6 per cent year on year to EUR2.2 billion (US$2.5 billion), drawn on revenues of EUR35.8 billion, which increased six per cent.

The airline will reduce its A380 fleet and replace them with 747-400s and the 777-9s. This shows 'we are moving away from flying big aircraft at big hubs to flying smaller aircraft in smaller hubs,' said CEO Carsten Spohr.

This will involve reducing the number of A380s from 14 to eight in 2023.

Last year, the company faced EUR850 million in higher fuel costs and EUR500 million in extra expenses because of cancellations and delays.

Startup costs for the integration of former airberlin assets into Eurowings amounted to EUR170 million, a large contributor to that unit's operating loss of EUR230 million.

The airline only plans to increase capacity 1.9 per cent, half the previous target of 3.8 per cent. It also aims for an adjusted operating profit of 6.5 - 8 per cent, having reached 7.9 per cent in 2018 and 8.3 per cent in 2017.

Mr Spohr said the company would have order fewer aircraft from Airbus if the manufacturer had not agreed to take back six A380s.

The airline placed an order March 13 for 20 Boeing 787-9s and 20 more Airbus A350-900s to accelerate the renewal of its widebody fleet.

Mr Spohr said Airbus was prepared to pay Lufthansa's book value for the aircraft as anticipated for 2022 and 2023, therefore the airline does not incur any financial penalties or gain benefits from the decision.

'Ordering the A380 was the right decision at the time,' Mr Spohr said. 'Back then it was the most economical and fuel-efficient aircraft.' But that is now no longer the case.

Two more A380s will be transferred from Frankfurt to Munich in the summer of 2020; seven of the aircraft will then be operated at both hubs.

Mr Spohr said the decision about where the remaining eight aircraft will be based from 2023 onwards will not be made until a year prior.

The decision was also a result of infrastructure constraints in Frankfurt. 'If we didn't have these problems, we would have made a different fleet decision.'

Lufthansa Group plans to phase out seven sub-fleets through 2027: The A340-300 and -600, the A330-200, the 747-400, the 777-200ER and 767-300ER and the MD-11F. The A340-300s are currently still in service at Lufthansa, Swiss and Brussels Airlines, the -600 and 747-400 at Lufthansa. The 777-200ER and 767-300ER are operated by Austrian and the MD-11F by Lufthansa Cargo.


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