Q1 loss! Strike action affects Lufthansa's performance
Date：05-15 140 Belong to：News Information
The cargo subsidiary of Lufthansa Group posted an adjusted operating loss of $23.5 million in the first quarter, down from $166 million in the same period in 2023, as strikes by cabin and ground staff negatively affected results.
The company also attributed the loss to inflation and a challenging market environment, although the actual situation for cargo companies is improving, as evidenced by 11% demand growth and rate increases in the quarter. Industry growth looks better compared to the weak first quarter of 2023.
Excluding flights canceled due to the strike, Lufthansa Cargo had a marginal operating profit of $3.3 million, the company said.
Lufthansa Cargo's core transportation revenue fell 17% year-on-year to $706 million, in line with competitors such as Air France-KLM, American Airlines and Delta Air Lines (Air France-KLM -16.5%, American Airlines -15% and Delta -16%). United Airlines, the best performing airline in the first quarter, saw its cargo revenue fall 1.8% to $391 million, more than double that of its U.S. peers. Smaller South American carrier Avianca said cargo revenue fell 8.3%. Most airlines don't break out cargo profits on their income statements like Lufthansa does.
On the positive side, revenue declines are slowing for Lufthansa (DE: LHA) and other cargo airlines as the market begins to normalize after a 16-month downturn. In 2023, cargo revenues fell 37% year-over-year.
Lufthansa Cargo is the world's 16th-largest cargo airline. It has 11 Boeing 777 freighters and four Airbus A321 converted freighters for regional services. Another six aircraft are leased from AeroLogic, a joint venture with DHL, and are operated by AeroLogic on behalf of Lufthansa Cargo. Lufthansa Cargo also manages belly cargo for Lufthansa and all of its sister airlines except Swiss International Air Lines.
The decline in revenue for cargo operators was due to a 25% drop in yields, while sales from distance-based charges increased by 10%. Operating expenses increased by 5% due to higher employee costs related to wage and salary increases, as well as higher depreciation.
Overall, the Lufthansa Group posted an adjusted operating loss of $935 million, including $350 million in losses from work stoppages for company employees or certain airport employees. The strike resulted in the cancellation of 6% of scheduled flights. Management said the growth was slower than expected due to delayed deliveries of aircraft, seats and engines by suppliers, as well as unplanned engine overhauls.
In response to supplier issues, Lufthansa will increase available capacity to only 92% of pre-pandemic levels in the second quarter, down from a planned 94%. Most of the workforce now has long-term collective bargaining agreements, which has increased labor costs. Management said it will respond to this financial challenge by significantly increasing productivity in the coming years, including freezing investments in new projects and administrative staff hiring.
The company also attributed the loss to inflation and a challenging market environment, although the actual situation for cargo companies is improving, as evidenced by 11% demand growth and rate increases in the quarter. Industry growth looks better compared to the weak first quarter of 2023.
Excluding flights canceled due to the strike, Lufthansa Cargo had a marginal operating profit of $3.3 million, the company said.
Lufthansa Cargo's core transportation revenue fell 17% year-on-year to $706 million, in line with competitors such as Air France-KLM, American Airlines and Delta Air Lines (Air France-KLM -16.5%, American Airlines -15% and Delta -16%). United Airlines, the best performing airline in the first quarter, saw its cargo revenue fall 1.8% to $391 million, more than double that of its U.S. peers. Smaller South American carrier Avianca said cargo revenue fell 8.3%. Most airlines don't break out cargo profits on their income statements like Lufthansa does.
On the positive side, revenue declines are slowing for Lufthansa (DE: LHA) and other cargo airlines as the market begins to normalize after a 16-month downturn. In 2023, cargo revenues fell 37% year-over-year.
Lufthansa Cargo is the world's 16th-largest cargo airline. It has 11 Boeing 777 freighters and four Airbus A321 converted freighters for regional services. Another six aircraft are leased from AeroLogic, a joint venture with DHL, and are operated by AeroLogic on behalf of Lufthansa Cargo. Lufthansa Cargo also manages belly cargo for Lufthansa and all of its sister airlines except Swiss International Air Lines.
The decline in revenue for cargo operators was due to a 25% drop in yields, while sales from distance-based charges increased by 10%. Operating expenses increased by 5% due to higher employee costs related to wage and salary increases, as well as higher depreciation.
Overall, the Lufthansa Group posted an adjusted operating loss of $935 million, including $350 million in losses from work stoppages for company employees or certain airport employees. The strike resulted in the cancellation of 6% of scheduled flights. Management said the growth was slower than expected due to delayed deliveries of aircraft, seats and engines by suppliers, as well as unplanned engine overhauls.
In response to supplier issues, Lufthansa will increase available capacity to only 92% of pre-pandemic levels in the second quarter, down from a planned 94%. Most of the workforce now has long-term collective bargaining agreements, which has increased labor costs. Management said it will respond to this financial challenge by significantly increasing productivity in the coming years, including freezing investments in new projects and administrative staff hiring.
