Lufthansa Anticipating Operating Profit


An operating result of about 400 million euros in the current fiscal year after 28 million euros in the year 2001 was forecast by Lufthansa CEO JÌ?rgen Weber at the 49th Annual General Meeting in Cologne today. 
“This forecast takes predictable risks into account and is therefore resilient. It depends, of course, on continued recovery in demand for air transport services and that there are no renewed geopolitical events that might counteract the current upturn ,” Weber pleaded for caution. Given those prerequisites Lufthansa also assumes that it will again be in a position to pay a dividend once more for 2002. 

In its most difficult fiscal year yet, Lufthansa had mastered the dual crisis of the economic downturn and the repercussions of the terrorist attacks flexibly, professionally and with sound judgment. As a result of rapid capacity cuts , comprehensive cost cutting measures and the efficiency improvement programme “D-Check”, it had been possible to avoid an operating loss in 2001 and to more than double the operating result of the first quarter 2002 in comparison with the same period last year. It increased by seven million to twelve million euros.


That trend had continued. “Encouraged by high load factors we are beginning to cautiously reactivate capacity previously taken out of service. The booking figures also suggest a further recovery,” said Weber. In the course of the summer schedule Lufthansa will put into service again 18 of the 43 grounded aircraft, five of them on intercontinental routes. That capacity increase mainly on the North Atlantic routes and in the Asia/Pacific traffic region reflects the optimistic belief in a further recovery even though the total offering still lagged significantly behind that of pre-September 11, emphasized Weber. The Group’s success is the result of flexible response to the air transport markets. The objective is not to gain market share for the sake of market share. “We want to grow profitably and average yields must remain stable,” reconfirmed Weber. After all, the company had not succumbed to the temptation of generating volume by means of dumping prices. That strategy had paid off and would be maintained.


In view of the extreme burdens and the negative consolidated result for the year 2001 Lufthansa had decided not to pay any dividend. “Even the most modest dividend would have had to come out of reserves and we would have eroded the substance of the company,” said Weber, explaining the decision to the shareholders. Executive Board members, management staff and employees of the company had also made a sacrifice in solidarity with the company. He thanked the employees, the customers and the shareholders who had not lost their trust in the company during these difficult times.


The Group CEO dealt critically with some of the background conditions of air transport. The year 2001 had shown that a further consolidation of the industry was overdue. Yet, national state protection is distorting competition again and again, while those who had secured their own survival under their own steam and using superior concepts were given short shrift. “We need a completely new aviation regime,” demanded Weber. While aviation industry in the U.S.A. was supported with billion dollar amounts, tax relief and inexpensive credits Lufthansa had to pay an amount of 32 million euros from its own coffers for the new on-board security systems alone. In addition, the CEO went on, the German airlines were still waiting for the disbursement of the 71 million euros promised as compensation for the damage caused as an immediate consequence of September 11 and the subsequent closure of North American air space. In other European countries the airlines had already received these payments. More liberalization, stable insurance conditions, uniform security standards worldwide, reduction of the distortion of competition and of structural deficits - that is what Lufthansa is fighting for, mainly in Berlin and Brussels.

ADVERTISEMENT


Lufthansa will continue to bank on quality and innovation in the future, on the development of a global network and on new products that offer the passenger amenities and supplementary benefits. The no-frills airlines also had their place and their future in the aviation industry. Yet, these so called cut-price airlines accounted for less than three per cent of the total air transport volume in Germany. “As we know our strengths and possibilities of action we will not get nervous but can remain very relaxed,” said Weber. Lufthansa had the competence to give a suitable answer to any market change at any time.


Lufthansa has an immense advantage through its alliance strategy: The Star Alliance has managed to get to the top of all alliances in the five years of its existence. And that recipe for success would now grow further with the addition of LOT, Spanair and Asiana to the airline grouping. Lufthansa is one of the major global network airlines at home on all the international hubs. Lufthansa is not going to depart from this course. “We want to assure quality, consolidate our alliances, expand our partnerships and carefully extend our programme again,” summarized the Lufthansa CEO.


——-