Lufthansa Group reported second quarter (Q2) revenue at €9.4bn with an increase of 17% over Q2 of 2022. The Group had reported a revenue of €8bn in Q2, 2022. The operating result (adjusted EBIT) increased to €1.1bn and thus almost tripled as compared to previous year’s figures of €392 million. This corresponds to an operating margin of 11.6% and is a new record for a second quarter result at the Lufthansa Group. Net income also marked a new high of €881 million over previous year’s net income of €259 million.
For the first half of 2023, the Group posted an Adjusted EBIT of €812 million recording an increase of almost €1bn over last years’ figure of €-185 million euros). The Adjusted EBIT margin rose to 4.9 % in the first half-year while the Group’s revenue in the first half of 2023 were €16.4 billion euros.
Carsten Spohr, CEO Lufthansa Group, was thankful the second quarter was a more "stable operation" than last year. He said: "Our clear focus on stability has proven to be the right choice for our customers, our employees and our shareholders. Besides that, we have sharpened our strategic focus with agreements on the sale of LSG Group and AirPlus as well as the agreement to acquire ITA."
All passenger airlines achieved positive results. Between January and June, the airlines carried over 55 million travellers, an increase of 30% compared with the same period in 2022 of 42.4 million passengers. In the second quarter alone, 33.3 million passengers flew with the Group's airlines while last year’s Q2, passenger numbers were at 29.2 million). This corresponds to 84% of the 2019 level.
The passenger airlines in the Lufthansa Group steadily expanded the capacity on offer in the course of the first half-year. For the first six months it was 19% above the same period last year, but still 21 % below pre-crisis levels. For the second quarter alone capacity on offer was at 83% of the pre-crisis year 2019.
Overall, the adjusted EBIT of passenger airlines improved by around €1bn to €965 million in Q2, 2023. Looking at the first six months, Adjusted EBIT even rose by almost €1.7bn to €453 million while the previous year EBIT was a loss of €1.2bn.
Lufthansa Cargo's average yields remained at 40% above the pre-crisis level of 2019, outperforming the market as a whole in the second quarter. Freight capacity in the second quarter was 6% up on the previous year, mainly due to the recovery in passenger flight operations and the associated expansion of belly capacities.
Lufthansa Cargo's Adjusted EBIT decreased to €37 million (previous year: €482 million) but still remained significantly above the result achieved in 2019. In the first half-year, Adjusted EBIT came to €188 million (previous year: €977 million).
Lufthansa Technik continued to report a very positive business performance in the second quarter of 2023. The MRO segment benefited from the persistently high demand for air travel across the market, which was accompanied by a further increase in demand from airline customers for maintenance and repair services.
Lufthansa Technik generated an adjusted EBIT of €156 million in the second quarter, an increase of 39% on 2022 and also a record for a second quarter (previous year: €112 million). For the first half-year, the company generated adjusted EBIT of €291 million, 21% more than last year (previous year: €241 million).
Due to the strong operating result and high bookings, the Lufthansa Group generated an operating cash flow of €3.1bn in the first half-year. After deducting net capital expenditure, which mainly related to the Group’s investments in its future fleet of new-generation aircraft, an Adjusted free cash flow of €1.1bn was generated.
Net debt decreased to €5.9bn as of June 30, 2023 (31 December 2022: €6.9bn) and was thus below the pre-crisis level from 2019. The Group's net pension liabilities increased to €2.3bn (31 December 2022: €2.0bn) due to a slight decrease in long-term interest rates. Equity was €8.1bn (31 December 2022: €28.5bn).
At the end of June 2023, the company had access liquidity totalling €10.8bn at its disposal (31 December 2022: €10.4bn). This puts liquidity further above the target corridor of €8bn to €10bn.
In the second quarter of the financial year 2023, the Lufthansa Group continued its transformation into an Airline Group. Three significant transactions were carried out within just three months between April and June.
In April, the sale of the LSG group's remaining international catering business to the private equity company AURELIUS was announced. The sale of the payment services provider AirPlus to SEB Kort, which was announced in June, also marks an important step in the Lufthansa Group's focus on its core business.
In addition, the Group announced the acquisition of a minority share of 41% in ITA Airways with Lufthansa taking over the remaining shares in ITA at a later date.
Remco Steenbergen, chief financial officer, Deutsche Lufthansa, said: “I am proud that all passenger airlines were able to generate a strong operating result and that we achieved a record result in the second quarter. Lufthansa Group has shown over the past few years that it delivers on its promises. This also applies to the development of our portfolio, where we have made significant progress in our transformation into an Airline Group. In the coming months we will continue to work on getting as close as possible to our 2024 targets already in the current year."
The Lufthansa Group expects demand for flight tickets to remain high for the rest of the year - people's desire to travel continues unabated. Currently, bookings for the months August to December 2023 are on average more than 90 percent of the booking volume of the pre-crisis level.
The company is therefore continuing its capacity expansion and plans to offer around 88 percent of pre-crisis capacity in the third quarter of the year. Due to the continued high demand for air travel and supported by industry-wide supply constraints, the company expects a further slight increase in yields compared to the record level of the previous year. Adjusted EBIT in the third quarter is thus expected to exceed the pre-crisis level of 1.3 billion euros in 2019.
The Lufthansa Group expects demand to remain high for the rest of the year especially in the premium classes, mainly driven by private travellers. Demand for business travel is also increasing and the Lufthansa Group expects it to recover to up to 70% of pre-crisis levels by the end of the year. Due to the persisting bottlenecks in the European air traffic system, however, the capacity offered by Lufthansa Group airlines will be at the lower end of the previous expectation range, that is around 85%.
Due to the strong outlook for the second half of the year, the Group has specified its outlook for the full year 2023 and now expects to achieve an Adjusted EBIT of more than €2.6 billion (previously: significant increase compared to the previous year's value of 1.5 billion euros). The result is thus expected to be one of the three best in the history of the Lufthansa Group. According to the company’s assessment, this specified forecast is in line with current market expectations.
In 2023, the Lufthansa Group expects to achieve an Adjusted EBIT margin of at least 8% and an Adjusted Return on Capital Employed (Adjusted ROCE) of over 10%.