Record Q2 results propel Lufthansa toward best annual results ever

Europe’s leading airline group Lufthansa more than tripled its net profit in the second quarter and expects to post one of the best annual results in its history. Subsidiary Brussels Airlines carried 3,95 million passengers in the first half, making its Q2 a good one, with a profit of 31 million euros.

Three years after requiring government bailouts to survive the coronavirus pandemic, it posted a net profit of 881 million euros and revenue up 17% to 9,38 billion euros. Subsidiary Brussels Airlines also delivered a solid Q2 result with a gain of 31 million euros.

33,3 million passengers

Like most other major European airlines, the Lufthansa Group, including Austrian Airlines, Brussels Airlines, Swiss, and budget carrier Eurowings, along with several other subsidiaries, can present shiny figures for the second quarter.

Those figures are mainly the result of sharply higher demand for travel and increased ticket prices. Passenger flights were up to 14% over one year, while ticket prices were 25% more expensive than in the second quarter of 2019.

All the while, the number of passengers, up to 33,3 million in Q2, remains lower than before the pandemic, equal to 84% of the second quarter of 2019. The capacity offered also remains below pre-pandemic levels, at 83% of Q2 2019 levels.

Top result

Still, an operating profit of 2,6 billion euros is expected for 2023, up from 1,5 billion in 2022. This would be one of the three best results in Lufthansa’s history, along with those of 2017 (3 billion) and 2018 (2,8 billion). The future looks, therefore, good with bookings “for late summer and early winter standing at 90% of pre-pandemic levels”.

However, Lufthansa must consider a 7% increase in its costs on the passenger side, mainly to inflation and resolving the lack of staff. The group hired around 9 000 new employees after cutting 30 000 jobs between 2020 and 2021 due to the health crisis.

€15 profit per passenger

Lower ticket prices are not imminent, according to CEO Carsten Spohr. Costs for personnel, fees, and services are high and will continue to rise.

Billions of euros in losses during the pandemic also need to be compensated for, which is why the group currently makes only 15 euros profit per passenger. Meanwhile, the group has also reduced its debt to 5,9 billion euros, a lower level than before the pandemic.

Tense negotiations with pilots

Lufthansa is also seeing a resumption of business with China and a recovery in business travel. The airline is also planning additional connections to India, given the growing business interest in the Indian market.

Two more Airbus A380s will return to scheduled service this year, with more to follow along with new Boeing 787s and Airbus A350s in the coming year. In the first six months of the year, the Lufthansa Group took delivery of three Boeing 787s, six Airbus A320, and three A321 NEOs. It has also placed orders for fifteen Airbus A350s and seven Boeing 787s.

To cut costs, crews will also have to fly more, and planes will be used more frequently and efficiently. However, tense negotiations with pilots at Lufthansa and Lufthansa Cargo will likely darken the rest of the year.

The latter began voting Thursday on whether to accept their employer’s latest contract offer, which calls for 25 to 50% wage increases over a five-year period, with a strike risk if less than half of the 5 200 pilots approve the proposal.

Also, solid Q2 for Brussels Airlines

Subsidiary Brussels Airlines carried 3,95 million passengers in the first half, up 45% compared to last year. As a result, revenue increased by 253 million euros to 705 million. However, there was still a loss of 12 million euros in the first half of the year, mainly due to the first quarter.

A profit of 31 million euros was already recorded in the second quarter. More stable fuel prices, increasing demand, and higher returns give confidence that the airline will achieve solid black figures for all 2023.