After overcoming the corona crisis and receiving help from the government, his business is doing better and better, and the outlook is really promising, given the lack of planes and the high demand. But the heart of the German market, which still represents a third of the group’s turnover, is facing difficulties due to the lack of personnel and the scarcity of airspace occupied by the military.
Shortening of the summer timetable
Lufthansa has already reduced its summer flight schedule and will do so again if system partners report anticipated issues, Spohr said. Even if the group’s hubs outside Germany return to full capacity, the company plans to use only 85-90% of its capacity for 2019.
That puts Lufthansa behind rivals such as Air France-KLM and parent British Airways IAG, but Spohr says it’s primarily a bet on strong performance. The pre-crisis level is not expected to be reached before the end of next year.
1,000 new employees per month
Already on the eve of the Easter tourist wave at the airports of Munich and Frankfurt, a heavy burden was weighing on Lufthansa. Operators continue to struggle to find enough staff to do the hard work at the terminals. Perhaps German language requirements should be dropped, suggests Spohr. After all, people in air traffic can get by with English.
The MDax Group itself is still understaffed, but aims to hire about 1,000 people a month to reach 115,000 employees by the end of the year, with a net increase of about 6,000 people.
Bonus to offset inflation
The Verdi union warns that many experienced workers are worried about layoffs and retirements, and that new ones are not yet well prepared. To calm things down, the leader of the Verdi group, Marvin Reshinsky, offers to pay everyone 3,000 euros in inflationary compensation bonuses to avoid another year of crisis.
Spohr rejects the special payment. Instead, he says, Lufthansa is paying wages above inflation because it wants the best employees in the industry. “Others may have good planes and good seats, but only we have Lufthansa employees.”
Strikes become a disadvantage
The CEO of the company criticizes the strikes in progress, including those outside his group: “Given the location, this is starting to become a real disadvantage. Lufthansa, he said, suffers more from strikes than other airlines, not being protected by relevant regulations in Germany.
Spohr would like to see earlier strike notices, as well as emergency relief agreements and binding arbitration. “But it is unlikely that this can be quickly implemented in Germany,” adds the boss of Lufthansa, recently appointed to this position until 2028.
back to more
After two bitter years of losses related to the Corona crisis, Lufthansa is back in positive figures in 2022. The record results of the Cargo and Maintenance business in particular generated a profit (adjusted EBIT) of 1.5 billion euros for the Group. A year earlier, it was in the red of 1.7 billion – not counting the severance pay due to the elimination of several thousand jobs.
In total, the Lufthansa group companies Eurowings, Swiss, Austrian and Brussels carried around 102 million passengers last year, more than double their 2021 figure. The group’s turnover almost doubled to reach 32.8 billion euros. After a loss of 2.2 billion euros a year earlier, the company’s profit amounted to 791 million euros.
Only the Swiss and Austrians made a profit
In the passenger business, on the other hand, only two subsidiaries, Swiss and Austrian, managed to return to full-year profits. Due to problems at German hubs, flag carrier Lufthansa ended the year with an operating loss of 466 million euros. Spohr expects Lufthansa and low-cost carrier Eurowings to break even in 2023.
In general, the group’s operating profit should significantly exceed the figure for 2022. This is more than 1.6 billion euros expected by analysts, reported chief financial officer Remko Steenbergen. In 2022, the group has already far exceeded its initial expectations.
Ticket price increase announced
In the new year, the increase in profits should come at the expense of the passenger business. From Lufthansa’s perspective, the conditions are right for this. The company expects strong global demand with limited supply. The booking situation for Easter and beyond is favourable, Spohr explained. And in the first quarter, ticket prices are expected to be around 20% higher than the comparable pre-crisis figure of 2019. In early summer, this value will increase even more.
The news was well received on the stock market, with Lufthansa shares up more than 6% and its market capitalization reaching around 12.5 billion euros. It wasn’t until 2017 that market capitalization increased, Spohr said. However, despite the annual profit, shareholders will only receive dividends for 2023, the chief financial officer said.
