Lufthansa first quarter net loss up 57% as strike action takes its toll, plans to cut operating costs

Lufthansa Group has reported a net loss of €734 million for the first quarter of the year, a further 57% increase in its first quarter 2023 net loss of €467 million. Its earnings per share were down further in the negative at 61 cents from a loss per share of 39 cents in the first quarter last year. Its total revenue saw a 5% increase at €7.4bn, up from €7.01bn in the first quarter last year. It recorded an operating loss of €849 million, a sharp increase in its operating loss of €273 million euros in the first quarter last year. The company said strike action had weighed heavily on the company in the first quarter, impacting it by around €350 million in the first quarter. The group's airlines' revenue rose by 7% to €5.6bn euros, with capacity up 12% despite strike action leading to flight cancellations. Lufthansa Airlines reported an adjusted EBIT loss of €640 million. The company said that due to the high losses, the airline will reduce operating costs and stop new projects. It will also consider the need for additional staff in administrative roles. ""We are now leaving the first quarter behind us, which was mainly impacted by strikes, and are at a turning point,"" said Deutsche Lufthansa CEO and chairman of the executive board Carsten Spohr. ""We have reached long-term wage agreements for the majority of our employees. This means planning certainty and clarity for the coming years."" The group had managed to decrease its net debt from €5.7bn at the end of 2023 to €5.5bn at the end of the first quarter. Its cash flow from operating activities was down 17%, though remained at a positive €1.3bn in the first quarter. Its net capital expenditures were down 10% in the first quarter at €940 million, meaning its adjusted free cash flow was down 37%, but again at a positive with €305 million. The group's chief financial officer Remco Steenbergen added: ""We cannot be satisfied with the operating result for the first quarter; at more than 350 million euros, the various strikes had a significant impact on our result. Nevertheless, cash flow was positive due to the continuing high demand for air travel."" The higher demand also benefited Lufthansa Technik as MRO services demand remained strong, with its revenue increasing 15% over last year's first quarter, to €1.8bn. It reported a positive adjusted EBIT of €116 million, down from last year's first quarter of €135 million. ""Of course we are pleased to have earned more than 100 million euros in the first quarter of 2024 as well,"" said Lufthansa Technik CFO William Willms. ""The bottom line, however, is that our Adjusted EBIT fell by 14% compared to the same prior-year period despite significant revenue growth. This illustrates the efforts we have to make to increase our margin."" Lufthansa said it plans to increase its available capacity in the second quarter to 92% of ""pre-crisis level"". The increase is lower than initially planned ""due to further investments in operational stability and delayed aircraft deliveries."" By the third quarter, it intends to increase capacity to 95% of pre-crisis level, with the full year capacity expected to be at 92% of pre-crisis level. Its operating result for the second half of the year is expected to be ""higher than in the previous year.""