Revenue raised steeply by 15 per cent. Earnings affected by initial outlays on forward-looking projects
In the first quarter of 2001 Lufthansa again operated successfully in what was a difficult market. 
The good level of fleet capacity utilisation plus stable average yields pushed up traffic revenue significantly. It increased by 16.1 per cent to € 3.0 billion. The stronger demand for premium products and cross-currency parities also had a positive effect. The Group generated total revenue of € 3.6 billion -15.1 per cent more than in the first three months of last year. 

However, the sharp increase in fuel prices - caused partly by the high US dollar exchange rate - pushed up the cost of materials. This higher cost burden dented earnings to the extent of € 121 million. In addition, Lufthansa commenced extensive preliminary work during the period under review for the e-business projects conceived last year. Obviously, these outlays were not yet counterbalanced by any significant savings or additional income.

Consequently, the operating result for the first quarter of 2001 declined under the impact of the rise in fuel costs and the once-only project outlays. It amounted to € 5 million, which was € 94 million less than last year`s first-quarter result. As the busi-ness performance of airlines in the first three months, when traffic volumes are at a low ebb, is usually not representative of the year as a whole, the first-quarter result is an inappropriate indicator for predicting the likely outcome over twelve months.

At present it is very hard to give a reliable earnings forecast for 2001 as a whole owing to various uncertainties. The intensity and duration of the economic slowdown in the United States and its implications for Germany and Europe as a whole plus the continuing pay dispute with the representatives of the cockpit crews are risk factors. Nevertheless - subject to reaching an acceptable agreement with the trade union involved - Lufthansa is sticking to its ambitious target of posting an operating result for 2001 on a par with last year. Lufthansa is confident that it will be able to maintain its pole position in the industry yet again this year.

The full Group Report for the first quarter of 2001 will be published on the Internet on May 17, 2001 at http://www.lufthansa-financials.de.

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