Lufthansa Lifts Operating Result By Over 50 Per Cent

Group revises profit forecast sharply upwards: increase of 40 per cent now expected for full year
With a nine-month operating result of EUR 794 million the Lufthansa Group impressively reaffirmed its leading position in the industry. This is 50.7 per cent higher than last year and almost matches the record three-quarter result achieved in 1998.
Lufthansa`s outstanding performance is also reflected in its net profit for the first three quarters, which already surpasses the corresponding full-year figure for 1999. “The year 2000 will be one of the best ever in the Company`s history,” commented Lufthansa Chairman Jürgen Weber today as he presented the results.
All the Group`s business segments did well in the third quarter. This trend is set to continue and will have a positive impact on revenue and earnings. Lufthansa has therefore revised its profit forecast for 2000 as a whole sharply upwards. In place of the projected year-on-year rise of 15 per cent, Lufthansa now expects to increase its operating result by around 40 per cent compared with 1999.


As one of the key industries of the 21st century, the air traffic sector is already being spurred each day by the New Economy, Jürgen Weber said. “Lufthansa has always been a pioneer of new technologies and is forging a link between the `old` and `new` economy.” Lufthansa`s Chairman and Chief Executive Officer outlined the Group`s extensive activities in the field of e-business, which are oriented to the “proven strategic triangle of customers, staff and shareholders”.


Revenue increased by 20.2 per cent:


Lufthansa`s successful business performance was helped by the robust worldwide demand for air traffic services. The Group`s airlines (passenger and freight) managed to increase their capacity utilisation to the record level of 71.9 per cent. The number of passengers carried grew by 7.5 per cent to 35.5 million. The passenger load factor was pushed up to a new all-time high of 75.2 per cent. The freight load factor also increased - to a very creditable 67.4 per cent.


All the Group`s business segments achieved substantial growth. In the first nine months Lufthansa`s turnover totalled EUR 10.8 billion - 20.2 per cent more than at the same stage last year. Improved capacity utilisation plus rising average yields produced a marked increase in traffic revenue. It climbed by 16.9 per cent to around EUR 9 billion. The particularly successful trend in cargo business persisted in the third quarter and led to a disproportionate jump in traffic revenue by 23.7 per cent. Passenger business contributed to the overall growth with a 15.4 per cent rise in turnover. Other revenue shot up by 38.8 per cent, mainly as a result of consolidation changes in the first half of the year.
Fuel cost rise limited by successful hedging strategy:

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The cost of materials rose by 24.3 per cent on the year. It was driven above all by the steep hike in fuel prices, which are invoiced in US dollars. The Group spent a total of EUR 976 million on kerosene - 57.2 per cent more than in the first three quarters of last year. Lufthansa`s far-sighted price hedging strategy paid off in the third quarter, too: without the extensive hedging measures, fuel costs for the first nine months would have more than doubled. Staff costs grew by 21.7 per cent, chiefly because of the first-time consolidation of labour-intensive companies in the Catering and Ground Services segments. Adjusted for these consolidation effects, staff costs expanded by the much lower rate of 11.9 per cent.


Pre-tax profit up 60 per cent:


Lufthansa`s corporate strategy again proved its effectiveness and strengthened the Group`s profitability appreciably. Thus the operating result was lifted by 50.7 per cent to EUR 794 million. The profit from ordinary activities, too, surged by 60 per cent to EUR 928 million.


The Group`s business segments were reinforced by substantial capital expenditure measures. Of the total capital spending of over EUR 1.8 billion, 72.4 per cent went on modernising and expanding the fleet. The operational cash flow grew by 68.8 per cent to more than EUR 1.8 billion. This meant that the investment programme was fully financed by internally generated funds.


The full Group Report for January-September 2000 can be found on the Internet at: www.lufthansa-financials.de

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