Lufthansa Lifted by Falling Fuel Costs
March 17 2016 - 3:20AM
Dow Jones News
LONDON—Deutsche Lufthansa AG on Thursday reported a sharp rise
in full-year earnings aided by lower fuel costs, while signaling
the pace of improving financial results would slow in 2016.
Net profit for the year rose to €1.7 billion ($1.9 billion) from
€55 million, Germany's largest airline said. The year-earlier
figure was heavily affected by several one-time items. The loss in
the traditionally weak fourth quarter fell to €50 million from a
€427 million loss a year earlier.
Lufthansa's more closely watched adjusted earnings before
interest and taxes rose 55.2% to €1.82 billion. The company had
forecast adjusted earnings of €1.75 billion to €1.95 billion. Sales
increased 6.8% to €32.1 billion.
Lufthansa is in the midst of a restructuring program to lower
costs and restore competitiveness in the face of aggressive rivals.
It has been losing market share in its short-haul business to
budget carriers Ryanair Holdings PLC and easyJet PLC, while
suffering a flight of long-haul passengers to Middle East carriers
such as Emirates Airline and Qatar Airways on routes to Asia.
Lufthansa's efforts to lower costs, such as moving flights to
its own discount unit Eurowings, have met union opposition
triggering strikes. Earnings in the fourth quarter suffered a €100
million hit from strike costs, the airline said. Even so, Eurowings
delivered a slight operating profit last year, ahead of plan.
"We will consistently press ahead with the further development
of the Lufthansa Group throughout 2016," airline Chief Executive
Carsten Spohr said, adding that "as long as we can further align
our cost structures to market levels, the Lufthansa Group has great
prospects in all its business segments."
A prolonged slump in oil prices has been a boon to airlines,
cutting the size of one of their largest costs. Chief financial
officer Simone Menne said fuel would be a financial tailwind also
this year. Still, she said, "cost discipline remains one of our
paramount tasks. We must lower the unit costs at our hub
airlines."
Lufthansa said it expected adjusted earnings to rise "slightly"
this year, with unit costs falling excluding fuel and currency
effects. Earnings should rise at mainline Lufthansa and at Austrian
Airlines, though fall for Swiss International Air Lines because of
the strong local currency. Budget unit Eurowings is expected to
make a loss amid expansion efforts.
The carrier proposed a dividend of €0.50 a share
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
March 17, 2016 03:05 ET (07:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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