Lufthansa is making a lot of money again. This is not just because people are traveling more frequently again after the corona pandemic.
The return of the desire to travel and higher ticket prices have given Lufthansa the third-highest profit in its history in daily business in 2023. However, no further big jumps are in sight.
In the middle of the strike by ground staff, CEO Carsten Spohr in Frankfurt only promised an operating result at the previous year’s level for the current year. The rise in ticket prices is likely to be over for now. And Lufthansa will not be offering as many tickets again in 2024 as before the pandemic. However, shareholders can look forward to a dividend again.
Passenger business is booming
Lufthansa boss Spohr sees the group back to its old financial strength after the struggle for existence in the corona pandemic. Last year, Lufthansa achieved an operating profit (adjusted EBIT) of almost 2.7 billion euros before special items – around 76 percent more than in the previous year, which was still affected by the pandemic. Only in 2017 and 2018, around the bankruptcy of then-rival Air Berlin, did the group earn more in day-to-day business.
Unlike in 2022, this time the passenger business again contributed the lion’s share of profits. The group’s own passenger airlines returned to the black with an adjusted operating result of 2 billion euros, after having made a loss of 300 million euros in the previous year. The subsidiaries Swiss, Austrian, Brussels and Eurowings achieved record results – as did the maintenance division Lufthansa Technik. The board canceled the planned partial sale of the maintenance subsidiary in the fall.
Prices for air freight transport are declining
Meanwhile, the freight division Lufthansa Cargo was unable to repeat its record results from the pandemic years. While she had earned 1.6 billion euros in daily business in 2022, this time she only contributed 219 million euros. As a result of the recovery in passenger traffic around the world, much more space was available in the cargo holds of passenger jets. The prices for air freight transport therefore fell significantly.
Airline tickets, on the other hand, became more expensive again, also because the airlines’ seating capacity could hardly keep up with the increased demand. Last year, the airlines of the Lufthansa Group transported around 123 million passengers, around a fifth more than in 2022. According to the information, the average revenue per ticket grew by around six percent.
Profit at the previous year’s level
However, according to the Management Board’s assessment, this trend is unlikely to continue in the current year. Lufthansa boss Spohr expects unit revenues in the passenger business to stagnate at best. The average cost per seat should also remain stable – even if the ground staff are fighting for higher salaries with a strike this Thursday and Friday and the flight attendants are also threatened with a strike.
At the group level, Spohr is targeting an adjusted operating profit for 2024 at the level of 2023 – and thus again around 2.7 billion euros. He wants to further expand the entire range of seats with additional new aircraft. Nevertheless, according to the plans, it should only reach around 94 percent of the pre-Corona level from 2019. Last year it was reportedly 84 percent.
After several zero rounds as a result of the pandemic, shareholders can expect a dividend again in 2023. The bottom line is that the group earned almost 1.7 billion euros, which is twice as much as the year before. Shareholders are to receive a dividend of 30 cents per share. The last time Lufthansa paid out part of its profits was in 2018 – at that time the dividend was 80 cents per share.
Source: Stern
