In the second quarter, the Lufthansa Group benefited from a significant market recovery with increasing passenger and booking numbers. Relaxation of travel restrictions in international air traffic and a great pent-up demand among passengers drove both demand and activity. In June alone, the number of bookings was more than twice as high as at the beginning of the quarter. As planned, the capacity offered at the end of June was 40% of the pre-crisis level.
Carsten Spohr, CEO of Deutsche Lufthansa AG, says: "All Lufthansa employees worldwide have made great efforts to significantly lower costs in all areas. As a result, we have been able to stop the outflow of funds in the current phase of reviving our business and generate a positive cash flow for the first time since the beginning of the pandemic. The fact that more than 30,000 colleagues have left us in the process so far hurts us all, but is unavoidable to sustainably save the more than 100,000 remaining jobs."
Due to the positive development of its airlines, record results at Lufthansa Cargo and the continued recovery of Lufthansa Technik and the LSG Group, the Lufthansa Group reduced operating losses in the second quarter of 2021 by 43% to a loss of €952 million compared to the first quarter of 2021.
Adjusted free cash flow in the second quarter was positive at €340 million, mainly due to strong bookings. Operating cash flow was positive at €784 million due to positive working capital effects related to strong bookings in the second quarter. Excluding these effects, the cash burn averaged €200 million per month.
Group sales in the second quarter amounted to €3.2bn, 70% higher than in the second quarter of the prior year of €1.9bn. The operating loss based decreased to €952 million compared to a loss of €1.7bn a year ago. Net loss in the second quarter was €756 million compared to a loss of €1.5bn a year ago.
The capacity offered, measured in passenger kilometers, was 29% of the pre-crisis level of 2019 in the second quarter of 2021. In total, the airlines of the Lufthansa Group carried 7 million passengers in the past three months. This corresponded to 18% of the pre-crisis level compared to the second quarter of 2019. The seat load factor was 51%, 32 percentage points lower than in the second quarter of 2019.
In June, offered capacity was already at 34% compared to the same month in 2019, and around 40% at the end of the month. The load factor was 58% in June, positively influenced by the pick-up in demand on short- and medium-haul routes in Europe. The number of destinations served is currently at 84% of the pre-crisis level. By September, nearly all destinations will be offered again, confirmed the airline group.
The Group's airlines reduced their losses due to the recovering demand and successful restructuring efforts. Adjusted EBIT at the Network Airlines was a loss of €1.2bn compared to a €1.5bn loss last year.
In the freight business, Lufthansa Cargo continues to benefit from the scarce cargo capacity in the bellies of passenger aircraft and the continued high demand for air freight. Adjusted EBIT in the logistics segment rose to €326 million in the second quarter from €299 million in the prior year. For the first half of the year, Lufthansa Cargo recorded an Adjusted EBIT of €640 million, the highest ever result in this period in the history of Lufthansa Cargo.
Lufthansa Technik continued its earnings recovery and improved its Adjusted EBIT in Q2 to positive €86 million compared to a €126 million loss in the previous year. For the first half of the year, Lufthansa Technik reported an Adjusted EBIT of €102 million compared to a loss of €122 million in the previous year.
At the end of the second quarter, the Lufthansa Group had available liquidity of €11.1bn, which includes unused funds from the government's stabilization measures and loans of around €3.9bn. The proceeds of a €1bn bond issue in July have not yet been taken into account.
At €8.9bn, net debt was lower that the €9.9bn at the end of 2020, which is due to the drawing of part of the Silent Participation I of the Economic Stabilization Fund, which is accounted for as equity. Excluding the drawing, net debt at €10.4bn was around €500 million higher at the end of 2020. In addition, supported by positive valuation effects on pension liabilities of €1.9bn, the equity ratio increased by 4.2 percentage points to 7.7 percent compared to the end of 2020 (December 31, 2020: 3.5 percent).
Remco Steenbergen, CFO of Deutsche Lufthansa AG, says: "In our financial management, our focus remains on strengthening our balance sheet. The second quarter was another step in the right direction. However, there is no way around making the Lufthansa Group profitable again as quickly as possible and implementing further cost reductions."
The Lufthansa Group continues to assume that the Group airlines' capacity, measured in seat kilometers offered, will be around 40% of the pre-crisis level in 2019 in 2021. A further increase in capacity to around 50% of the pre-crisis level and an increase in passenger numbers is expected for the third quarter. The Group thus expects to be able to stop the operating cash outflow in the third quarter and to generate positive EBITDA.
In 2021 as a whole, the Lufthansa Group continues to expect an increase in Group sales and a reduction in operating loss as measured by Adjusted EBIT.