Lufthansa Q2 Profit Surges, Specifies FY23 Adj. EBIT View, Warns On Capacity; Stock Down

Deutsche Lufthansa AG reported Thursday significantly higher profit in its second quarter with strong revenue growth amid ongoing demand growth in global air travel.

Looking ahead for the third quarter, the German flag carrier expects adjusted EBIT to exceed the pre-crisis level of 1.3 billion euros in 2019. The firm also specified its adjusted EBIT forecast for fiscal 2023, which is in line with current market expectations, but warned on capacity to be at the lower end of expected range. In Germany, the shares were losing around 6 percent in the morning trading.

For the third quarter, the company expects a further slight increase in yields driven by continued high demand for air travel and supported by industry-wide supply constraints.

For fiscal 2023, the airline now expects to achieve an adjusted EBIT of more than 2.6 billion euros, while previous outlook was a significant increase compared to the previous year’s value of 1.5 billion euros.

For the rest of the year, Lufthansa Group expects demand to remain high especially in the premium classes, mainly driven by private travelers. Demand for business travel is also increasing. Lufthansa Group expects to recover to up to 70 percent of pre-crisis levels by the end of the year.

Meanwhile, the capacity offered by Lufthansa Group airlines will be at the lower end of the previous expectation range, that is around 85 percent, due to the persisting bottlenecks in the European air traffic system.

Accordingly, 2023 is expected to form an important step towards achieving the financial targets the company has set itself for 2024. Lufthansa Group expects to achieve an adjusted EBIT margin of at least 8 percent.

Remco Steenbergen, Chief Financial Officer, said, “I am proud that all passenger airlines were able to generate a strong operating result and that we achieved a record result in the second quarter…. In the coming months we will continue to work on getting as close as possible to our 2024 targets already in the current year.”

For the second quarter, net income surged 240 percent to 881 million euros from the previous year’s 259 million euros, with earnings per share improving 236 percent to 0.74 euro from 0.22 euro last year.

The operating result or adjusted EBIT increased 177 percent to 1.09 billion euros from 392 million euros in the prior year. Adjusted EBIT margin of 11.6 percent was a new record for a second quarter, up from 4.9 percent a year ago.

Adjusted EBIT of the Passenger Airlines improved to 965 million euros from previous year’s loss of 86 million euros. Meanwhile, Lufthansa Cargo’s adjusted EBIT decreased to 37 million euros from last year’s 482 million euros.

Group revenues for the second quarter grew 17 percent to 9.39 billion euros from previous year’s 8.0 billion euros with continued strong demand for air travel and high yields. Traffic revenue climbed 18 percent from last year to 8.04 billion euros.

The company recorded highest second quarter result ever for SWISS, Austrian Airlines, Brussels Airlines, Eurowings and Lufthansa Technik.

In the second quarter alone, 33.3 million passengers flew with the company’s airlines, up from previous year’s 29.2 million, with high global demand for air travel. This corresponds to 84 percent of the 2019 level.

For the quarter, capacity on offer was at 83 percent of the pre-crisis year 2019. Seat load factor was 83 percent, same as in 2019 before the Corona pandemic.

In Germany, Deutsche Lufthansa shares were trading at 8.27 euros, down 6.29 percent.

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