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Air Travel

Lufthansa forecasts positive 2022 outlook amid Q2 profit

By Lauren Arena / 4 August 2022 / Contact Reporter

Lufthansa Group is projecting sustained growth despite current “operational challenges” as it posted a return to profit in the second quarter, driven by premium demand, an increase in average passenger yields and record business for its logistics segment.

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The group, which owns Lufthansa German Airlines, SWISS, Austrian Airlines, Brussels Airlines and Eurowings, reported an operating profit of €393 million and adjusted free cash flow of €2.1 billion in the second quarter.

From April to June, passenger numbers rose to 29 million (74 per cent of 2019 levels) with a seat load factor of 80 per cent, which was just 3 points down from pre-pandemic levels. Yields improved significantly by an average of 24 per cent compared to the previous year – and marked a 10 per cent increase on 2019 levels.

In an earnings call on Thursday group CEO, Carsten Spohr, said the strong half-year result was achieved despite “ongoing challenges” as Europe’s aviation industry buckled under a surge in demand during the peak summer season.

“The joy of strong demand was and is clouded by operational difficulties. For the complex air traffic system, the ramp up from 20 per cent to 80 per cent in just a few weeks was just too steep,” he said.

Spohr pointed to industry-wide staff shortages, “unforeseeable” airspace closures due to the war in Ukraine and “unprecedented” aircraft supply bottlenecks as factors behind the disruption, but insisted the situation has “stabilised” across the group’s hub airports in Germany.

Lufthansa Cargo performed at record levels during the quarter, earning €482 million (up from €326 million in 2021) due to ongoing capacity shortages and disruption in sea freight. 

Booking activity remained strong, driven by premium leisure travellers. 

Overall capacity forecasts for the year remain stable at an average of 75 per cent of pre-crisis levels, however the forecast for Q3 has decreased slightly from 85 to 80 per cent. 

Business bookings, meanwhile, are reportedly on the rise and expected to increase further into the second half of the year.

According to chief financial officer, Remco Steenbergen, the corporate travel segment has seen a steady recovery, rising from 20 per cent of pre-pandemic levels in Q1 to 40 per cent in Q2. July saw levels of 50-60 per cent of 2019 traffic, while the group expects the segment to be 70 per cent recovered by Q4.

He added that business travel will look “more normal” in 2024 and that the group is “well on track” to reach 80 per cent recovery.

With overall demand expected to increase, the group plans to hire 5,000 new employees in the second half of 2022, including both cabin crew and ground staff. Spohr also expressed optimism over current negotiations with pilots in Germany who recently threatened strike action over a pay dispute. 

He insisted the group is in “strong position” and has become “more resilient” after the pandemic, stating that more than 70 per cent of ticket sales are generated outside of Germany. The positive passenger yield recorded in Q2 is set to continue into Q3, and the group now expects adjusted earnings before interest and tax (EBIT) for the year to be above €500 million. Net capital expenditure is expected to amount to around €2.5 billion.

“We want to and will continue to strengthen our position as the number one in Europe and thus maintain our place in the global top league of our industry,” Spohr added. “In addition to the achieved return to profitability, top products for our customers and prospects for our employees are now once again our top priority.”

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