Lufthansa cuts profit target

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By TESTCustomwebLP TESTCustomwebLP July 21, 2016 13:51

Lufthansa cuts profit target

Based on preliminary figures, Deutsche Lufthansa generated revenues of €15.0bn in the first half of 2016 compared to €15.4bn in the prior-year period. The Adjusted EBIT came to €529m compared to €468m, last year.

The Passenger Airline Group business segment achieved an Adjusted EBIT of €441m compared to €249m in the prior-year period. Unit revenues at constant currency decreased by 5.2 per cent on the same period of the previous year. Unit costs excluding fuel and currency effects were down year-on-year by 1.3 per cent. Not included in the half-year figures are the effects on the balance sheet and the income statement of the tariff settlement with the UFO flight attendants’ union, which is still subject to approval. Cumulative Adjusted EBIT for the other business segments (including consolidation and reconciliation) came to €88m compared to €219m in the prior-year period.

At the end of the first half-year net debt decreased to €2.5bn – at the year-end 2015 it was €3.3bn. Nevertheless, the Lufthansa Group’s IFRS equity ratio decreased to 10.4 per cent (year-end 2015: 18.0 per cent) due to the lower discount rate for pension obligations, which decreased to 1.6 per cent (year-end 2015: 2.8 per cent).

Advance bookings, especially on long-haul routes to Europe, have declined significantly, the airline states, which was in particular due to repeated terrorist attacks in Europe and to greater political and economic uncertainty since the original forecast was made in March. As of today, the Executive Board regards a complete recovery as not likely anymore. At its meeting yesterday, the Executive Board of Deutsche Lufthansa therefore decided to lower the full year forecast for the Adjusted EBIT from “slightly above previous year” to “below previous year”, despite an earnings performance above previous year in the first six months.

In particular in the third quarter, the Executive Board expects unit revenues at the Passenger Airline Group business segment to develop significantly weaker. The Executive Board now expects that unit revenues at constant currency will fall by 8 to 9 per cent in the second half-year. Planned capacity growth at the passenger airlines has been cut from 6.0 to 5.4 per cent for the full year. The Executive Board reiterates its forecast of declining unit costs excluding fuel and currency effects of about -2 to -3 per cent in the second half-year. On current projections, fuel costs will decrease by about €350m in the second half-year. The other business segments are expecting cumulative earnings on par with the same period last year in the second half-year. Restructuring costs are already included in the figures mentioned above.

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By TESTCustomwebLP TESTCustomwebLP July 21, 2016 13:51