Financial news

Lufthansa posts record result in 2007

Airline targets yet another improvement of its result for the current year.

Deutsche Lufthansa AG posted record figures for profit and revenue in 2007 for the second year in a row. The Group profit after taxes was 1.7 billion euros; more than double that of the previous year. Revenue during the last year increased by 13 per cent to 22.4 billion euros. The operating profit also climbed to a new record peak at 1.4 billion euros, which was equivalent to a rise of 63.1 per cent. Lufthansa Chairman and CEO Wolfgang Mayrhuber praised the level and quality of the result, as well as the renewed improvement of the already solid result saying: "The result emphasizes the excellent performance that has been rendered by everyone here at Lufthansa. It is especially worth mentioning that we have achieved this record result at a time when fuel prices are at their highest, financial markets are full of uncertainty and competition is harder than ever. The course that we have set is one of sustainability." Mayrhuber added that the outstanding figures were the result of the company's successful efforts to make Lufthansa an even greater asset for investors and a more attractive product for customers. In view of the excellent development of the operating profit, the Group Executive Board and the Supervisory Board will be proposing a 55 cent higher dividend of 1.25 euros per share at the annual general meeting.

The Lufthansa Group continued to implement its strategy by again focussing on its core competencies and profitability during 2007: All business segments contributed to the success with positive results. The airlines of the strategic passenger business segment achieved excellent results. The development of SWISS International Air Lines was particularly successful: The Swiss airline, which has been fully consolidated in the Group accounts since July 2007, had the best year in the company's history. During the past year, the airlines were able to successfully consolidate cost and revenue synergies of altogether 233 million euros – a value that clearly surpassed all expectations. Mayrhuber was full of praise, saying: "The management and employees of our Swiss subsidiary have contributed to a very special success story." The business segments, Logistics, MRO and Catering, were also able to succeed in hard-fought competition and further improve their respective operating results. The profitable Lufthansa Systems had to sustain certain one-time special effects; however, it was able to further consolidate its position as the leading IT services provider in the aviation industry with its platform strategy and high-quality technological products.

The Lufthansa Group's investment in the future is a high priority. The current order for more than 170 new aircraft shall not only secure the sustainable modernization of the fleet and profitable growth, but also constitute a major contribution to environmental protection.

Lufthansa prepares itself for the future

"The figures speak for themselves: Our position is strong. We want to maintain the successful course that the Lufthansa crane has set, but we don't want to rest on our laurels", stressed Wolfgang Mayrhuber in Frankfurt. He added that the Group's "Upgrade to Industry Leadership" initiative would help Lufthansa secure industry leadership in earning power and profitability. The Lufthansa CEO remained confident that the Group was well-equipped to deal with any eventualities. New cooperation partners and Star Alliance members add to the appeal of growth markets. Mayrhuber explained that by purchasing a 19 per cent stake in JetBlue, Lufthansa had made a decision for the future, positioning itself for the further liberalization of air traffic through "open skies". Mayrhuber went on to say that, "the perspectives for the aviation industry are full of promise. We want to continue to succeed in the future with our foresight, our performance and our quality. In spite of the current uncertainty in the financial markets, the economic conditions remain good for Lufthansa. There have been no ground breaking changes in terms of the fundamental conditions or the need for mobility, and our performance in 2007 was outstanding." Lufthansa remains confident that it will be able to continue in 2008 from where it left off with its excellent operating result in 2007. On the basis of the current forecasts for the economy, the Executive Board is targeting yet another improvement of the result, assuming that the high fuel prices can be successfully compensated as in the past.

Annual figures 2007

The Lufthansa Group generated revenues of 22.4 billion euros in 2007, representing growth of 13 per cent. Traffic revenue increased by 14.4 per cent to 17.6 billion euros. As of the third quarter of 2007, the figures also include the first time consolidation in the Group accounts of SWISS International Air Lines for the July to December period. The increase can mainly be attributed to the effects of the consolidation (9.4 per cent), as well as the continued rise in passenger figures (6.4 per cent).

As a result of the consolidation effects and the expansion of the offer, the operating expenses rose by 10.8 per cent to 22.5 billion euros. The consolidation effects were especially mirrored in the rise in expenses for material and personnel. A major cost factor was the total of 3.9 billion euros spent on fuel, equivalent to a year-on-year rise of 505 million euros. Without the successful fuel price hedging measures, the Lufthansa Group would have spent an additional 109 million euros on fuel.

Lufthansa posts an operating result of 1.4 billion euros for 2007. This represents a year on year rise of 63.1 per cent. The adjusted operating margin reached 6.9 per cent. The increase by two percentage points in comparison with the previous year reflects the good performance in all the business segments. The Group posted book gains of about 503 million euros from the sale of its shares in Thomas Cook AG. The Group result consequently rose to 1.7 billion euros (previous year: 803 million euros).

Lufthansa invested a total of 1.4 billion euros in 2007, of which more than 1.1 billion euros were invested in the purchase of new aircraft. Operating cash flow totalled 2.9 billion euros. On 31 December 2007, the net liquidity of the Lufthansa Group totalled 768 million euros.

Lufthansa Group* 

 

2007

2006

Percentage change

Revenue

 

€m

 

 

22,420

 

 

19,849

+ 13.0

 

of which traffic revenue

 

€m

 

 

17,568

 

 

15,354

 

 

 + 14.4

 

Profit from operating activities

 

€m

 

 

1,586

 

 

1,078

 

 

 + 47.1

 

Group result

 

 €m

 

 

1,655

 

 

803

 

 

+ 106.1

 

Operating result

 

 €m

 

 

1,378

 

 

845

 

 

+ 63.1

 

Adjusted operating margin**

 

in % 

 

 

6.9

 

 

4.9

 

 

+ 2.0 PP 

 

Capital expenditure

 

 €m

 

 

1,378

 

 

1,929

 

 

- 28.6

 

Cash flow

 

 €m

 

 

2,862

 

 

2,105

 

 

+ 36.0

 

Employees (as of 31 December 2007)

 

 

 

 

105,261

 

 

94,510

 

 

+ 11.4

 

Earnings per share (undiluted)

 

 

 

3.60

 

 

1.75 

 

 

+ 105.7

 

Proposed dividend

 

 

 

1.25

 

 

0.70

 

 

+ 78.6

*) All figures including SWISS for the period from July to December 2007

**) Operating result plus write back of provisions divided by revenue

 

Disclaimer in respect of forward-looking statements

Information published in this press release with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication. Since forward-looking statements are by their very nature subject to uncertainties and imponderable risk factors – such as changes in underlying economic conditions – and rest on assumptions that may not or divergently occur, it is possible that the Group's actual results and development may differ materially from those implied by the forecasts. Lufthansa makes a point of checking and updating the information it publishes. It cannot, however, assume any obligation to adapt forward-looking statements to accommodate events or developments that may occur at some later date. It neither expressly nor conclusively accepts liability, nor gives any guarantee, for the actuality, accuracy and completeness of this data and information.