Business
Lufthansa Posts Surprise Return to Profit as Bookings Surge
By
William Wilkes
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3 November 2021, 06:00 GMT Updated on 3 November 2021, 06:57 GMT
- Summer results boosted by record earnings at cargo division
- Carrier says annual loss to halve as passenger revival begins
Deutsche Lufthansa AG posted a surprise profit in the third quarter as cargo demand boomed and said a reopening of the U.S. border to Europeans will keep earnings positive through year-end.
The German group reported adjusted earnings before interest and tax of 17 million euros ($20 million) for the three months through September, its first profit since the start of the Covid pandemic. Analysts had predicted a loss of 169 million euros, based on a Bloomberg survey.
Lufthansa said it should be able to at least halve its full-year loss after previously predicting only that it would be narrower than last year’s level.
The summer profit was based largely on record results at the cargo arm, with the network airlines that normally drive the business reporting a loss. Passenger demand is now beginning to take off amid a widespread easing of coronavirus curbs, with bookings back to four-fifths of pre-crisis levels and strong sales in premium classes. The group plans to offer more than 70% of its usual capacity in 2022.
“With rising demand for business travel and a record result at Lufthansa Cargo we have mastered another milestone on our way out of the crisis,” Chief Executive Officer Carsten Spohr said in the release. Lufthansa completed a 2 billion-euro capital raise last month to help repay a government bailout.
The cargo division posted a 301 million-euro profit in the third quarter, its best-ever performance, as a structural shift to air freight during the pandemic spurred demand. The group’s full-service airlines had a 304 million loss, overwhelmingly from Lufthansa’s own-brand operations, with the Swiss, Austrian and Belgian arms recording small profits.
The Eurowings discount brand was also profitable following a revival in short-haul European travel.
Lufthansa said it’s nearing its target of cutting the payroll to 100,000 people from almost 140,000 before the crisis, with 3,000 staff yet to agree their departure. A new voluntary exit plan has begun for cabin crew.
Full-service rival
Air France-KLM posted a return to profit last week and predicted its 12-month result would be slightly positive.
IAG SA, Europe’s third major airline group and the owner of British Airways, is due to report quarterly figures Friday.