Lufthansa Group operating profit down in second quarter

While Lufthansa Group's revenues were up 7% to €10bn in the second quarter of 2024, its adjusted operating profit was €686 million, down from €1.1bn last year. Its net result totalled €469 million in the quarter, down from €881 million a year prior. The group said that normalising ticket prices, decline in yields in all of its traffic regions - particularly in the second quarter, strikes at various Lufthansa Group companies as well as external system partners had all impacted its earnings by over €100 million. In addition, its operating expenses increased 10% to approximately €10bn as well ""inflation-related cost increases"" had impacted its results. For its airlines, second quarter revenues totalled €8bn, up 4.5% from the year prior. The airlines reported an adjusted operating profit of €581 million, down from €965 million last year. In the first half of the year, it has reported an adjusted operating loss of €337 million. ""Our most important airline, Lufthansa, was particularly affected in the first half of the year,"" said Deutsche Lufthansa CEO and chairman of the executive board Carsten Spohr. ""This is because, in addition to the effects of market developments, there were special effects such as the high strike costs, further delays in aircraft deliveries and the resulting inefficiencies, as well as structural problems of the airline."" Lufthansa Airlines recorded a second quarter adjusted operating profit of €213 million, down from last year's €515 million. For the first half of 2024, it recorded an adjusted operating loss of €427 million. Spohr clarified: ""We therefore want to accelerate the overall modernisation of Lufthansa Airlines with a turnaround programme in order to make it the Group's flagship again."" The airline will decommission its A340-300, A340-600, A330-200 and 747-400 sub-fleets by 2028, reducing its long-haul fleet to six aircraft types. In addition, the programme will also aim to further optimise its routes and increase revenue by ""consistently delivering on the premium promise"" such as through the introduction of its new business class Allegris as well as further investments in other products. Its MRO subsidiary Lufthansa Technik had a ""very strong performance"" in the second quarter with revenues up 18% to €1.9bn. Its adjusted operating profit for the period was up 30% to €203 million. ""We are still on course to grow further from a strong position,"" said Lufthansa Technik CFO William Willms. ""However, it won't be a walk in the park. We are negatively impacted by the disproportionately high cost increases and the ongoing difficulties in the supply of materials across the industry."" The MRO segment's operating expenses were up 14% in the quarter to €1.8bn. The company said the difficulties in materials supply was triggered by ""delays in deliveries by the manufacturers and suppliers of aircraft, engines and aircraft components."" The company added that staff shortages in production areas as well extensive skill-building measures are having ""a negative impact"". Willms added: ""On the positive side, there is definitely no lack of demand. The company concluded some 320 new contracts in the first half of the year."" The group's first half free cash flow amounted to €878 million, down from last year's €1.1bn. It decreased its net debt to €8.1bn by the end of the second quarter. Its available liquidity increased to €10.6bn. In its full year outlook, it anticipates an adjusted operating profit of around €1.4-1.8bn. The company also anticipates its acquisition of a 41% stake in ITA Airways to close in the fourth quarter of this year, following the European Commission's approval earlier in July.