Lufthansa boss Carsten Spohr does not want to give the passengers too much hope for a smooth summer. “We will have the real bottleneck at the airports,” said the Lufthansa boss at the presentation of the 2022 corporate balance sheet in Frankfurt.
His company is doing better and better after surviving the Corona crisis and reimbursed state aid, the prospects are actually dazzling given the shortage of aircraft and strong demand. But in the core market of Germany, which still accounts for around a third of the group’s sales, there are problems due to a lack of personnel and the scarce airspace required by the military.
Lufthansa has already cut its summer flight schedule and will do so again if the system partners report foreseeable problems, said Spohr. Even if the corporate hubs outside of Germany are fully operational again, the group is only planning 85 to 90 percent of its 2019 capacity. Lufthansa is lagging behind competitors such as Air France-KLM and the British Airways parent company IAG, but is, according to Spohr, doing so especially stable operation. The pre-crisis level is expected to be reached at the end of next year at the earliest.
Lufthansa wants to hire around 1,000 people every month
For Lufthansa, a lot is already hanging at the airports in Munich and Frankfurt for the Easter wave of travel. Operators continue to have difficulties finding sufficient staff for the heavy work in the terminals. Spohr suggests that perhaps German language skills should be dispensed with. After all, you can get along with English in aviation. The MDax group itself does not yet have enough people on board, but wants to hire around 1,000 people every month in order to achieve a net increase of around 6,000 to 115,000 employees at the end of the year.
The Verdi union warns that many experienced workers are dealing with termination and retirement, while the new ones are not yet sufficiently trained. For peace of mind, Verdi Group advisor Marvin Reschinsky proposes paying each and every 3,000 euros inflation compensation premium to avert another year of crisis. Spohr rejects the special payment. Instead, Lufthansa pays salary increases above inflation, after all, they want the best people in the industry. “Maybe others have nice planes and seats, but we’re the only ones with Lufthansa.”
The CEO also criticizes the ongoing strikes outside of his company. “It’s starting to become a real locational disadvantage.” Lufthansa is hit harder by labor disputes than any other airline, without being protected by relevant regulations in Germany. Spohr would like longer notice periods before strikes, as well as emergency service agreements and mandatory arbitration. But he is skeptical as to whether this can be implemented quickly in Germany, says the Lufthansa boss, who has just been appointed until 2028.
Back in the black
After two bitter years of losses in the Corona crisis, Lufthansa returned to the black in 2022. Above all, the record results in freight and maintenance brought the group a profit (adjusted EBIT) of a good 1.5 billion euros in day-to-day business. A year earlier he was in the red with 1.7 billion – not counting the severance payments for the reduction of many thousands of jobs.
Overall, the Group companies Lufthansa, Eurowings, Swiss, Austrian and Brussels carried around 102 million passengers last year, more than twice as many as in 2021. Group revenue almost doubled to EUR 32.8 billion. The bottom line was a profit of 791 million euros after a loss of 2.2 billion the year before.
However, in the passenger business only the subsidiaries Swiss and Austrian managed to return to profitability for the year as a whole. With the problems at the German hubs, the core airline Lufthansa ended up with an operating loss of 466 million euros. Spohr now expects Lufthansa and the low-cost airline Eurowings to break even in 2023.
Profit increase should come from the passenger business
Group-wide, the operating profit should significantly exceed that of 2022. CFO Remco Steenbergen reveals with a wink that this means more than the good 1.6 billion euros that analysts have been expecting so far. By 2022, the group had ultimately significantly exceeded its initial expectations.
In the new year, the increase in profits must come from the passenger business. From Lufthansa’s point of view, the prerequisites for this seem to be right. The booking situation for Easter and the following months is strong. And in the first quarter, ticket prices are likely to be around 20 percent above the comparative value from the pre-crisis year 2019, as they have been since last summer. In early summer, this value will increase.
The news was well received on the stock exchange: the Lufthansa share rose by more than six percent, its market value reached around 12.5 billion euros. Market capitalization was only higher in 2017, Spohr said. Despite the annual profit, the shareholders are not to receive a dividend. A distribution should only be made for 2023, said the chief financial officer.
