Profits increase at Lufthansa but clouds darken ahead

Profits increase at Lufthansa but clouds darken ahead

Lufthansa has released first-half results for 2016, confirming adjusted EBIT increased by €61 million euros to €529 million.

Total group revenue for the first half amounted to €15 billion euros, a 2.1 per cent decline on the prior-year period.

Despite higher passenger volumes, traffic revenue was down 4.5 per cent due to strong pricing pressures in both the airline and the cargo businesses.

This earnings result reflects both lower fuel prices and improved cost structures.

Unit costs excluding fuel costs and currency effects decreased by 1.3 per cent in the first half-year compared to the prior-year period.

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The fuel cost benefits amounted to €597 million; and the pricing pressure, which is also partly the product of the lower fuel prices, resulted in a 5.2 per cent reduction in unit revenues excluding currency effects for the first half-year.

Routes to Europe from South America and Asia showed a particularly weak performance.

“The Lufthansa Group achieved a solid result for the first half-year,” said Carsten Spohr, chairman Deutsche Lufthansa AG.

“We are making good progress in implementing our Three-Pillar-Strategy.

“We see progress in all the areas where we can influence the changes ourselves.

“And this is particularly true for our cost structures and the growth of Eurowings, the development of which is progressing well.”

Spohr continued: “At the same time, our industry has to prepare for a difficult second half-year.

“The terrorist attacks in Europe and also the increasing political and economic uncertainties are having a tangible impact on passenger volumes.

“The forward bookings, in particular for our long-haul services to Europe have declined significantly.

“We expect the high pricing pressure to continue.”