Most successful airline in Europe: Operating profit jumps by 44 per cent Group strategy secures profitable growth
With an operating profit of more than € 1 billion, Lufthansa posted the best result of all European airlines for the fourth year in a row.
It is 44 per cent higher than the 1999 result and impressively demonstrates Lufthansa`s success and competitive strength. “The business strategy of our integrated all-round Aviation Group has proved to be both appropriate and fruitful. It has facilitated our success and has led to growth. We shall stick to it so as to sustain our profitability,” Jürgen Weber, Lufthansa`s Chairman and Chief Executive Officer, said at today`s annual press conference in Frankfurt.
The shareholders, too, are to participate in the Company`s fine performance in 2000. At the Annual General Meeting the Executive and Supervisory Boards will recommend an increase in the dividend by around four cents compared with last year`s payout to € 0.60 per share.
Group revenue raised by 18.8 per cent:
In the financial year 2000 Lufthansa profited from the robust worldwide demand for air traffic services and achieved new all-time records. The Group improved overall capacity utilisation by a further 0.7 percentage point to reach an all-time high of 71.8 per cent. Lufthansa German Airlines and Lufthansa CityLine carried a combined total of 47 million passengers, a year-on-year rise of 7.4 per cent. Thanks to a marked increase in sales coupled with only a moderate expansion of capacity, the passenger load factor rose to a record 74.4 per cent.
This capacity planning for the Group`s airlines turned out to be the right course. The record seat occupancy rate and higher average yields pushed up traffic revenue by 17.5 per cent. They climbed to € 12.5 billion. Passenger business alone generated € 10.0 billion, which was an improvement of 16.2 per cent compared with 1999. Air freight business also grew at an above-average rate, achieving a 23.3 per cent increase in revenue.
As the other revenue generated by non-airline business grew disproportionately, the share of traffic revenue in overall revenue declined by 0.8 percentage point to 82.6 per cent. Total Group revenue last year amounted to € 15.2 billion, a rise over twelve months of 18.8 per cent. Other operating income increased by 21.4 per cent to € 1.6 billion. This was assisted by the capital gains accruing from the disposal of an Amadeus share package in the amount of € 375 million.
Fuel price hedging strategy reaps rewards:
The cost of materials rose very sharply last year. It went up by 24.4 per cent. The main reason for this was the cost of kerosene. Our higher traffic output, surging fuel prices and cross-currency effects caused the fuel bill to soar by 65 per cent to around € 1.5 billion. Without Lufthansa`s forward-looking price hedging measures, the Group would have been forced to pay almost € 1 billion more for kerosene than in 1999.
Staff costs rose more slowly than revenue. They increased by 12.2 per cent to € 3.6 billion amid an annual average growth of the employee total by five per cent to 69,523.
Strong financial position facilitates investments in the future:
All the business segments helped to bolster the Group`s profitability last year through their earnings contributions and cash value added. The operating result earned in 2000 totalled € 1.04 billion, surpassing the corresponding figure in 1999 by 44.1 per cent. With a profit from ordinary activities of € 1.2 billion, Lufthansa once again posted a very strong earnings result. After taxes the net profit for the year comes to € 0.7 billion.
In the year 2000 Lufthansa again invested substantially in the modernisation and expansion of its fleet, spending a total of € 1.5 billion on aircraft procurement. The Company put 29 new airliners into service during the year under review. Capital expenditure on financial assets, at € 0.7 billion, was likewise up on the year. The fine earnings result, together with lower income tax payments, caused the cash flow from operating activities to swell by € 0.8 billion to € 2.1 billion. This enabled Lufthansa to finance its net capital expenditure completely from its own internally generated funds.
Excerpts from the Lufthansa Annual Report 2000 can be called up now on the Internet at http://www.lufthansa-financials.de.