Investors punish Lufthansa after Q1 loss

Lufthansa's CEO welcomed what he called "a good set of results"
AFP

Frankfurt am Main (AFP) – Shares in Lufthansa slumped Thursday even though the airline giant said it had pared first-quarter losses and confirmed its objectives for the full year.

The German group booked a net loss of 57 million euros ($69 million) between January and March, 11 million euros smaller than the previous year.

Executives were “very satisfied with how the first quarter went” and “feel on track for what we have planned for this year,” finance chief Ulrik Svensson said.

Investors were less sanguine, with stock in the Frankfurt-based firm shedding around 6.5 percent to trade at 23.93 euros by 12:30 pm (1030 GMT), making it the worst performer on the DAX index of blue-chip German shares.

The first quarter is historically a weak one for carriers, although Lufthansa was able to fatten margins at its airlines like Swiss, Brussels and Austrian Airlines and at its cargo division.

Passenger numbers reached a new record for January to March, the firm said, but added that changes to accounting rules had eroded its reported revenue.

Adjusted pre-tax profits reached 26 million euros, up one million year-on-year, while revenues slipped 0.7 percent to 7.6 billion euros.

The integration of parts of former rival Air Berlin into low-cost division Eurowings loaded it with “signficant one-off costs” as it gobbled up many whose aircraft and staff following the competitor’s insolvency last year.

No-frills Eurowings will grow its fleet to around 210 aircraft by 2019, making it the group’s second-largest.

Svensson said one-off costs shouldered by the unit “will continue to be significant during the coming months” — adding that the Air Berlin deal had been a “once in a lifetime opportunity” the group could not pass up.

Lufthansa left unchanged its forecast of adjusted pre-tax profit “slightly below” 2017’s level of 2.4 billion euros.

It revised expected growth in passenger numbers over the year down to 6.0 percent, as delivery of new Airbus A320neo planes was delayed and it grinds through disagreements with workers in Germany and Austria.

But the effects should be balanced out by higher profitability, Lufthansa said.

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