Lufthansa Group has reported an operating profit of €393 million and adjusted free cash flow of €2.1bn in the second quarter 2022. Net income increased significantly to €259 million compared to the net loss of €756 million in the prior year period. The company turned over €8.5 billion in the second quarter, almost three times as much as in the same period last year.
The airline group noted a strong increase in average yields and successful cargo segment drive was responsible for the positive quarterly result. Lufthansa noted that the boom in demand for airline tickets continues, and that load factors in premium classes were now above 2019 levels
Carsten Spohr, CEO of Deutsche Lufthansa, said: "The Lufthansa Group is back in the black. This is a strong result after a half-year that was challenging for our guests but also for our employees. Worldwide, the airline industry reached its operational limits. Nevertheless, we are optimistic about the future. Together, we have steered our company through the pandemic and thus through the most severe financial crisis in our history. Now we must continue to stabilize our flight operations. To this end, we have taken numerous measures and successfully implemented them. In addition, we are doing everything in our power to expand the premium positioning of our airlines again and thus to fully meet the demands of our customers and also our own standards. We want to and will continue to strengthen our position as the number one in Europe and thus maintain our place in the global top league of our industry. In addition to the achieved return to profitability, top products for our customers and prospects for our employees are now once again our top priority.”
For the first half-year of 2022, the Group recorded an Adjusted EBIT of €-198 million compared to €-1.9bn in the prior year. The Adjusted EBIT margin amounted to -1.4 percent in the first half of the year (prior year: -32.5 percent). Sales increased significantly compared with the first six months of 2021 to €13.8bn euros compared to €5.8bn in the prior year.
The number of passengers on board Lufthansa’s passenger airlines more than quadrupled in the first half-year compared with the same period last year. All in all, the airlines in the Lufthansa Group welcomed 42 million travellers on board between January and June (previous year: 10 million). In the second quarter alone, 29 million passengers flew with the Group's airlines (previous year: 7 million).
In the first half of 2022, the offered capacity averaged 66 percent of the pre-crisis level. Looking at the second quarter in isolation, offered capacity amounted to around 74 percent of the pre-crisis level.
Yields improved significantly in the quarter by an average of 24 percent compared to the previous year. They also increased by 10 percent compared to the pre-crisis year 2019.
Despite the higher price level, the Lufthansa Group's flights had an average load factor of 80 percent in the second quarter. This figure is almost as high as before the Corona pandemic (2019: 83 percent). In premium classes, the load factor of 80 percent in the second quarter even exceeded the figure for 2019 (2019: 76 percent), driven by continued high premium demand among private travelers and rising booking numbers among business travelers.
Unit costs at the passenger airlines fell by 33 percent in the second quarter compared with the same period last year. Adjusted EBIT at the passenger airlines improved significantly in the second quarter to €-86 million (previous year: €-1.2 billion). Between April and June, the result was burdened by €158 million of irregularity cost in relation to disruptions in the flight operations. In the first half of the year, the Adjusted EBIT in the Passenger Airlines segment amounted to €-1.2 billion (previous year: €-2.6 billion).
SWISS generated an operating profit of €45 million in the first half-year (previous year was a loss of €383 million. In the second quarter, its Adjusted EBIT was €107 million (previous year: €-172 million). SWISS benefited above all from strong booking demand combined with profitability gains as a result of its successful restructuring.
Results in the logistics business segment remain at record levels. The demand for freight capacities is still high, also due to ongoing disruptions in ocean freight, said the company. As a result, average yields in the airfreight industry remain well above the pre-crisis level. Lufthansa Cargo adjusted EBIT rose by 48 percent compared to the same period last year, to €482 million (previous year: €326 million). In the first half-year the company achieved a new record Adjusted EBIT of €977 million (previous year: €641 million).
In the second quarter of 2022 Lufthansa Technik benefited from the further recovery in global air traffic and the resulting increase in demand for maintenance and repair services from airlines. Lufthansa Technik generated an Adjusted EBIT of €100 million in the second quarter (previous year: €90 million). For the first half-year, the company generated an Adjusted EBIT of €220 million (previous year: €135 million).
Net debt for the group decreased to €6.4 billion as of June 30, 2022 from €9bn in December 31, 2021.
At the end of June 2022, the company’s available liquidity amounted to €11.4 billion (December 31, 2021: €9.4 billion euros). Liquidity remains well above the target corridor of €6 to 8 billion.
Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa, said: "Returning to profitability in a quarter that was marked also by high geopolitical uncertainty and rising oil prices is a major achievement. This demonstrates that we are making good progress in recovering from the financial consequences of the Corona crisis. Even after the repayment of state aid last year, our goal remains to further strengthen the balance sheet on a sustainable basis. With a free cash flow of almost 3 billion euros, we were very successful in this regard in the first half of the year. Also in the full year 2022, thanks to the expected return to positive results, strict working capital management and disciplined investment activities, we forecast a clearly positive Adjusted free cash flow and thus a reduction in our net debt compared to the prior year."
Lufthansa Group is once again recruiting staff. In the second half year of 2022, the company will be hiring around 5,000 new employees, in line with the Group’s ramp-up plan while still ensuring sustainable productivity gains. The vast majority of new hires relates to cockpit and cabin of Eurowings and Eurowings Discover, ground personnel at airports, workers at Lufthansa Technik and catering staff at LSG. A similar number of new hires is planned in 2023.
The Lufthansa Group expects demand for tickets to remain high for the remaining months of the year with bookings for the months August to December 2022 currently at an average of 83 percent of the pre-crisis level.
The company plans to continue to expand capacity in line with demand and plans to offer around 80 percent of its pre-crisis capacity in the third quarter of 2022. This is expected to result in a further significant increase in Adjusted EBIT in the third quarter compared to the second quarter, primarily due to a continued improvement in the results of the Lufthansa Group Passenger Airlines.
For the full year 2022, the Lufthansa Group expects the offered capacity at the passenger airlines to amount to around 75 percent on average. Despite continuing uncertainty regarding global economic and geopolitical developments and the further progress of the Corona pandemic, the Group specifies its outlook and now expects Adjusted EBIT to be above €500 million for the full year of 2022. Net capital expenditure is expected to amount to around EUR 2.5bn.