Lufthansa Group issued this statement:
Substantial industry-wide capacity growth in Europe leads to lower unit revenues on short- and medium-haul routes in comparison to the high levels seen in the prior-year period
On a preliminary basis, Deutsche Lufthansa AG generated total revenues of EUR 7.9 billion in the first three months of 2019, a 3-percent increase on the prior-year period. Adjusted EBIT for the period amounted to EUR -336 million ($380 million US) on a preliminary basis (prior year: EUR 52 million).
Among other factors, first-quarter Adjusted EBIT was reduced by a EUR 202 million rise in fuel costs. Market-wide overcapacities in Europe also put downward pressure on fares. The negative trend was accentuated by the fact that first-quarter results for 2018 had been particularly strong, owing to the capacity reductions deriving from Air Berlin’s demise.
On this basis, the Lufthansa Group’s Network Airlines suffered a 5.2-percent currency-adjusted decline in their unit revenues for the period. The unit revenue decline at Eurowings, with its higher proportion of short- and medium-haul routes, amounted to 8.5 percent. First-quarter unit costs (ex fuel) decreased 0.8% percent at the Network Airlines and 7.2 percent at Eurowings, both on a currency-adjusted basis.
Lufthansa announced when presenting its 2018 annual results that, in view of the overcapacities in Europe, the strong comparable results for the prior-year period and the interim rise in fuel costs, earnings for the first quarter of 2019 were likely to be down from their prior-year level.
On a preliminary basis, the Network Airlines achieved an Adjusted EBIT of EUR -160 million (prior year: EUR 128 million) for the first quarter of 2019, while Eurowings saw its Adjusted EBIT for the period decline to EUR -257 million (prior year: EUR -212 million). First-quarter Adjusted EBIT for Lufthansa Cargo amounted to EUR 24 million (prior year: EUR 72 million), a 67-percent decline that is attributable to downward airfreight market trends, especially on routes between Europe and Asia. Lufthansa Technik reports a first-quarter Adjusted EBIT of EUR 125 million (prior year: EUR 107 million), while LSG achieved an Adjusted EBIT for the period of EUR 2 million (prior year: EUR 1 million). Adjusted EBIT for the Other Businesses amounted to EUR -59 million (prior year: EUR -29 million).
For 2019 as a whole, the Lufthansa Group confirms its expectation of an Adjusted EBIT margin of between 6.5 and 8.0 percent.
“We are seeing good booking levels for the quarter ahead,” says Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. “At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.”
Meanwhile Lufthansa is getting ready to take deliver of the first Airbus A321neo.