The return of the desire to travel and expensive tickets gave Lufthansa the second best quarter in its history in the summer. The airline achieved record revenues and earned more than it had in six years.
A strong travel summer brought Lufthansa record sales and a jump in profits in the third quarter. From July to September, adjusted operating profit rose by 31 percent to 1.5 billion euros, the company announced today. That was almost a third more than the year before.
The airline thus achieved its second-best result in the company’s history after the summer quarter of 2017, when the Air Berlin bankruptcy and a subsequent surge in demand filled Lufthansa’s coffers. The net result rose even more sharply by 47 percent to 1.2 billion euros. The return improved across the group by two and a half percentage points to 14.3 percent.
Expensive tickets are not a deterrent
This means that the summer overall, including the second quarter, was the most profitable ever for the MDAX group, it was said. Sales increased by eight percent year-on-year and reached a record high of 10.3 billion euros. “We have also significantly improved our operational stability and reliability despite continued adverse circumstances,” explained CEO Carsten Spohr. Lufthansa wants to live up to its quality standards even more in the future.
With high demand, greater supply and increased ticket prices, passenger airlines made almost all of their profits. The reason: Despite high inflation and a gloomy economic situation, private travelers in particular are not deterred from their desire to travel by expensive tickets. Average revenues, an indicator of prices, were two percent higher in the third quarter than in the same period last year and were 25 percent above the level of 2019, the year before the corona pandemic, which was disastrous for aviation.
From July to September, 38 million passengers were transported – five million more than last year. “The Lufthansa Group expects strong demand for airline tickets in the coming months,” said the aviation group. Holidaymakers also treated themselves to bookings in the more expensive premium classes more frequently than in the past. Lufthansa’s rivals in Europe had also recently reported record profits and high margins.
Flight offer still available Pre-crisis level
Meanwhile, the group’s flight offering is still noticeably smaller than before the pandemic: in the third quarter, the seat capacity on offer was 88 percent of the 2019 level. Bottlenecks in staff and aircraft have been clearly causing problems for the airlines since the crisis subsided. There are always jams in the system. While airports often lack enough employees for ground handling, the major aircraft manufacturers Airbus and Boeing can hardly keep up with the delivery of new jets due to scarce components and problems from suppliers.
In the final quarter, Lufthansa’s offering is expected to reach 91 percent of its pre-crisis level. As before, the board is targeting 85 percent for the year as a whole. The airline also confirmed its profit target for the full year of more than 2.6 billion euros, although after nine months 2.2 billion euros have already been achieved.
The reason for caution is the rise in oil prices, which will increase fuel bills to eight billion euros this year. That is around half a billion euros more than estimated in August and 2022. In addition to the funding cuts, the price driver is currently the war in the Middle East. Because of the conflict, Lufthansa recently stopped flights to Tel Aviv and Beirut.
Lufthansa shares at the top of the MDAX
“Even if the geopolitical situation remains challenging, our booking outlook makes us positive – not only for a very good consolidated result this year, but also beyond,” explained Spohr. In the coming year, the group, which is aiming to return to the top stock market league, wants to achieve a return of eight percent – a level that was only achieved in 2017/18 in the last decade. The supply should almost return to its previous strength at 95 percent of 2019, while unit costs should fall.
In the current quarter, Lufthansa performed better both in day-to-day business and overall than analysts expected on average. The news was accordingly well received on the stock market. The share recently rose by a good seven percent to 7.036 euros, making it the leader in the MDAX. Nevertheless, the paper was still traded around ten percent cheaper than at the turn of the year.
Meanwhile, after its record years during the pandemic, the Lufthansa Cargo freight division only just stayed in the black with one million euros. A year earlier, it had achieved an operating profit of 331 million euros. At the maintenance subsidiary Lufthansa Technik, the operating profit fell by a good tenth to 168 million euros. Thanks to strong demand for maintenance services, the division is still heading for record results in 2023.