After the impact of strikes in the first quarter, Lufthansa is now hoping for a strong summer season and wants to keep costs stable through savings. Global demand remains high, especially among private travelers, but business trips are also increasing again, the airline said on Tuesday. There are more holiday destinations in the program than ever before, and bookings for the summer flight schedule are already 16 percent higher than last year. CEO Carsten Spohr spoke of a “turning point”. “It’s already clear: it’s going to be another very strong summer of travel.”
Collective bargaining disputes in-house and at airports have resulted in high strike costs of 350 million euros, especially for the main brand Lufthansa. The airline is countering this with a savings program that could also affect administrative positions. The core brand Lufthansa wants to reduce material costs, stop new projects and examine administrative hiring, the group announced when presenting the final quarterly figures. “In the next few months we will work intensively to compensate for the effects of rising costs,” announced CFO Remco Steenbergen. Without taking the strikes into account, costs are expected to remain stable for the year as a whole.
As the company announced in the middle of the month, the operating loss in the seasonally weak first quarter tripled compared to the same quarter last year to 849 million euros. The main reason was the costs of flight cancellations as a result of the industrial action by ground and cabin crew at Lufthansa as well as the flying staff at the Austrian subsidiary Austrian Airlines. Average revenue, an indicator of ticket prices, fell slightly in the first quarter after a strong increase last year.
Despite the settlement of all tariff disputes, the consequences can still be felt in the second quarter because unsettled customers preferred to book with other airlines that were spared from the labor dispute. Lufthansa expects an operating result from April to June to be below the previous year, and then above the previous year in the second half of the year. The group’s companies, which also include the holiday airlines Eurowings and Discover as well as Swiss and Brussels Airlines, had twelve percent more passengers at 24 million. However, the number of seats available was lower than planned. Sales rose by five percent to 7.4 billion euros.
Capacities like before the pandemic have not yet been reached
The freight subsidiary Lufthansa Cargo also made a loss because of the strikes and is now taking in less as freight rates normalize after the pandemic-related boom. Lufthansa Technik’s maintenance business also suffered from the labor dispute, which was resolved with significant tariff increases over terms of three years.
For the year as a whole, the group airlines are offering 92 percent of the capacity from 2019, the year before the Corona crisis, instead of the previously planned 94 percent. “The increase is therefore lower than originally planned due to further investments in operational stability and delayed aircraft deliveries,” said Lufthansa. Spohr had already slashed his profit forecast for 2024 in mid-April due to the impact of the strike. The manager only expects an adjusted operating profit (adjusted EBIT) of around 2.2 billion euros – half a billion less than originally targeted.