The numbers reported Tuesday morning were within analysts' expectations. They had forecast an average turnover of 12.19 billion euros. After nine months, sales of 32.1 billion euros (previous year: 29.6 billion euros) and adjusted earnings of 1.2 billion euros (previous year: 1.5 billion euros) are in the books.
Nevertheless, management is adjusting its own forecast slightly downwards for the second time this year. Given the high fuel prices, adjusted earnings for the entire year are expected to be between 1.7 and two billion euros. At the beginning of August, the group's management had already extended its earnings forecast downwards - from more than two billion euros to 1.7 to 2.2 billion euros.
“The last quarter was the highest in terms of sales in the history of the Lufthansa Group,” CEO Carsten Spohr is quoted in the company’s statement: “With increasing revenues combined with consistently high demand and strict cost discipline, we were able to more than compensate for the fuel costs that increased by around half a billion euros.”
Lufthansa's figures are currently characterized by two developments. On the one hand, the company, like all airlines, is feeling the effects of high fuel prices as a result of the Iran war. At the beginning of the war, the company's management had predicted additional costs for kerosene of around 1.5 billion euros - albeit in the expectation that the conflict in the Persian Gulf would end quickly.
But so far there is no peace in the Middle East, even though there is currently renewed struggle for a diplomatic solution. Spohr had therefore already told journalists at the end of September that, in view of the ongoing dispute, they would be happy if the last-mentioned additional costs of 1.5 billion euros remained. And he added: "The number we will probably have to report at the end of the year will be higher."
Lufthansa is to a large extent protected against strong fluctuations in fuel prices through so-called hedging. Financial instruments such as derivatives are purchased that generate profits when the price of oil or other fossil fuels exceeds a certain limit. These profits cushion the higher fuel bill. However, the rate at which kerosene requirements are covered shrinks the further we look into the future. Lufthansa says it is currently more than 60 percent secured for next year.
On the other hand, the company is helped by continued high demand for premium bookings, i.e. tickets for premium economy, business and first class. Profitability is highest there. Spohr emphasized several times in the past few weeks that he was surprised at how stable this business was.
This is also addressed in the communication on the current quarterly report. Above all, the strong demand for premium tickets and on routes to Asia and North America has led to an increase in average revenues of 6.8 percent for the network airlines - these are Lufthansa Classic, Swiss, Brussels Airlines, Austrian Airlines and ITA - it says.
It is unclear how long this development will last and how long it can save Lufthansa's balance sheet. That's why it's so important for the management's ambitious medium-term goals - the adjusted profit margin should rise to eight to ten percent by 2030 -: The restructuring of the ailing core brand Lufthansa Airlines must work.
So far, however, the success is not really reflected in the numbers; the high fuel costs are eating up the efficiency gains. According to the current interim report, Lufthansa Airlines slipped back into the red in the first nine months with an adjusted operating loss of 180 million euros. In the same period last year there was an increase of 131 million euros at this point.
The consequences of the significantly increased kerosene prices are also evident in many other airlines in the group. The only exception is Swiss. Their adjusted operating result was 508 million euros (plus six percent). For Brussels Airlines there is a result of 15 million euros (minus 34 percent) in the books, for Austrian Airlines it is 48 million euros (minus 37 percent).
