Lufthansa shares soar on better than expected profits

Shares in Lufthansa soared Tuesday despite a dip in second quarter profits, as strong passenger numbers helped keep the German airline giant's full-year targets on track.

Lufthansa shares soar on better than expected profits
Photo: DPA

The group said it booked a net profit of €734 million between April and June, a drop of 0.8 percent year-on-year as it absorbs the costs of swallowing chunks of former rival Air Berlin.

But the result was better than analysts had predicted, sending Lufthansa shares surging 6.7 percent to €23.67 by 0950 GMT in Frankfurt, against a Dax index that was narrowly in the red.

Lufthansa said higher than expected “one-off” costs related to integrating parts of Air Berlin into low-cost carrier Eurowings had “depressed” earnings, and would continue to weigh on the bottom line in the third quarter.

High fuel costs as well as disruptions caused by unusually stormy weather also had “a negative impact” but were largely offset by a jump in passenger numbers and a cost-cutting drive, Lufthansa said.

In its statement, the group said adjusted pre-tax profits in the second quarter dipped 3.4 percent to 982 million, while revenues inched up 0.4 percent to €9.3 billion.

“Without the integration costs at Eurowings, which we willingly accepted to further strengthen our market position in Europe, the group's result would have grown,” said chief financial officer Ulrik Svensson.

The Lufthansa group – which includes Swiss, Brussels and Austrian Airlines – transported a record 67 million passengers in the first half of 2018.

North Atlantic and European routes in particular saw “strong customer demand”, a trend that looks set to continue.

“Bookings for the third quarter reflect good customer demand in key geographies such as Germany and the North Atlantic,” Svensson told reporters in a conference call.

The acquisition of many of Air Berlin's aircraft and staff following its insolvency last year will see no-frills Eurowings grow its fleet to around 210 aircraft by 2019, stepping up competition with budget rivals like EasyJet and Ryanair.

Lufthansa has estimated the full cost of Air Berlin's integration at €170 million, the final 50 million of which it will shell out in the third quarter.

Lufthansa is also eyeing a chunk of struggling Alitalia's fleet, as a wave of consolidation in the aviation industry shows no signs of abating.

Looking ahead, the German group left its forecasts unchanged, targeting adjusted pre-tax profit “slightly below” 2017's level of €3.0 billion.

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Lufthansa fires up ‘jumbo jet’ for surge in German tourists bound for Mallorca

German airline Lufthansa said Friday it was taking "extraordinary measures" to meet surging bookings for the Spanish holiday island of Mallorca, deploying a jumbo jet to ferry passengers from Frankfurt.

Lufthansa fires up 'jumbo jet' for surge in German tourists bound for Mallorca
Tourists enjoy the first days of summer on the island of Mallorca. Photo: picture alliance/dpa/AP | Francisco Ubilla

The group said it had seen a jump in reservations from German sunseekers in recent weeks, as concerns about the pandemic ease thanks to falling infection numbers and vaccination progress across Europe.

To meet demand, Lufthansa said it would swap the 215-seat Airbus A321 that usually plies the Frankfurt-Mallorca route for its Boeing 747-8 “jumbo jet”.The 747, also known as the “Queen of the Skies”, can carry 364 people and is the largest plane in Lufthansa’s fleet.

The super-large planes normally fly transatlantic routes but have been
mostly grounded since the pandemic upended air travel.

READ ALSO: ‘I really needed a break’: Pandemic-weary Germans find freedom on Mallorca

“Lufthansa is taking extraordinary measures in order to respond to a significant increase in booking demand for flights to Palma de Mallorca,” the airline said in a statement.

The jumbo jet will be used for four weekends over July and August, it added, Europe’s key summer travel season.

Mallorca is one of the most popular tourist destinations for Germans and is sometimes affectionately referred to as Germany’s “17th state”.

Before the pandemic, around five million German tourists visited the island
each year.

READ ALSO: ‘Germans are coming back’: Spaniards sceptical over return of tourists