Mayrhuber: "We are leaner and stronger"
Lufthansa’s Chairman and CEO Wolfgang Mayrhuber presented a healthy balance sheet today in Frankfurt. “Our financial strength and our commercial success give us a firm base to emerge stronger from the consolidation process in the European air traffic industry. The merger of Lufthansa and SWISS is the marriage of two world renowned airlines with the highest quality and service standards. The most important aspect is that it will produce clear benefits for our customers. More destinations, better connections, matching frequent flyer programmes and mutual lounge access enhance the attractiveness of both companies. The merger is not only beneficial for Switzerland and Germany, it is also advantageous for our Star Alliance partners and, in addition, strengthens the European aviation sector.” Wolfgang Mayrhuber looked back on a successful year with a substantially higher profit: “We set ourselves ambitious goals for the year 2004, and we achieved them. Our financial base is now even stronger, customer satisfaction is higher than ever before and our fitness programme is running according to plan. We are now leaner and stronger.” The operating profit was raised by €347 million to €383 million. Lufthansa’s shareholders will also profit from the good results: the Executive Board and Supervisory Board will submit a motion to the Annual General Meeting on 25 May to pay a dividend of €0.30 per share. For the year 2005 - taking into account the integration of SWISS - Lufthansa anticipates an operating result on a par with the 2004 figure.
The Group will continue to concentrate on its core competencies. “The individual business segments will develop at different speeds. Last year we began to focus on our core airline business.” That business yielded an exceedingly good operating profit of €265 million. Wolfgang Mayrhuber highlighted the Group’s profitable growth and its investments in product quality: “Our customer satisfaction is at the highest level, and we can raise it even further. Our customers are delighted with FlyNet and our Lounge concept, as well as with the free middle seat in the Business Class on continental routes and our private-bed on inter-continental flights. Quality and innovative service concepts are in demand, as are our attractive bargain fares.”
The Chairman of Lufthansa’s Executive Board also expressed his satisfaction with the performance trends of the other business segments: “We can report successes for every business segment. Each segment turned in an improved result.” Thomas Cook posted an operating profit again and the restructuring of LSG is also making good headway. Lufthansa Technik, Lufthansa Cargo and Lufthansa Systems all recorded positive operating results.
The action plan will continue to be resolutely implemented. The target is to boost the result by a total of €1.2 billion by 2006. “Up to the end of 2004 we achieved cost reductions of €378 million. The agreements reached with the trade unions ver.di and Cockpit at the end of last year were important steps towards ensuring Lufthansa’s ongoing competitiveness,” Mr Mayrhuber said. “Up to the end of 2005 we shall achieve additional cost savings of €402 million.”
The financial year 2004 in figures
In 2004 the Lufthansa Group generated revenue of €17.0 billion, which was 6.3 per cent more than in 2003. The Group’s airlines generated €12.9 billion thereof, a year-on-year increase of 10.3 per cent. Other operating income showed a marginal rise over twelve months of 1.4 per cent to just under €1.8 billion. It contains book profits totalling €402 million. €292 million of this came from the sale of a 13.2 per cent stake in Amadeus Global Travel Distribution SA and €113 million from the combined disposals of Autobahn Tank & Rast Holding, the Lufthansa Gebäudemanagement group and other companies.
Operating expenses were lowered last year by 0.3 per cent. They totalled €17.8 billion. The cost of materials went up by 14.4 per cent to €8.2 billion. This was due mainly to the higher fuel prices. In 2004 the Group had to spend €1.8 billion on fuel, which was 34.5 per cent or €467 million more than in 2003. Without the fuel price hedging measures the fuel bill would have been €232 million higher still.
For the year 2004 Lufthansa posted a profit after taxes of €404 million. In 2003 it had sustained a loss of €984 million owing to unscheduled impairment charges. The operating result likewise improved significantly, growing by €347 million to €383 million.
Capital expenditure climbed by 54.4 per cent to €1.8 billion, mainly owing to the modernisation and expansion of the fleet, and as in previous years was fully funded out of the cash flow.
At the end of 2004 the Group’s liquid assets exceeded its financial liabilities by €418 million. At end-2003 the Group had carried net debt of €591 million.