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Lufthansa posts steep quarterly loss but forecasts 2009 gain

Lufthansa posts steep quarterly loss but forecasts 2009 gain
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First Published: Thu, Apr 30 2009. 04 55 PM IST
Updated: Thu, Apr 30 2009. 04 55 PM IST
Frankfurt: Germany’s top airline Lufthansa fell into a steep first-quarter loss as the sector was hit by the global economic crisis, but vowed Thursday to end the year with a substantial operating profit.
The carrier posted a net loss of 256 million euros ($290 million), well above an average analyst forecast of 194 million euros compiled by Dow Jones Newswires.
Lufthansa had made a profit of 44 million euros in the first three months of 2008.
But its operating loss this time around, also 44 million euros, was much better than the 172 million loss expected by analysts and the airline’s shares took off in midday Frankfurt trading.
Finance director Stephan Gemkow told a news conference that the outbreak and spread of swine flu had not had a heavy impact on Lufthansa bookings.
“Given our relatively weak position in the Latin American market compared with some of our competitors I expect we will be affected below average by swine flu,” Gemkow said.
He added that use of flights to and from Mexico, the center of the outbreak, had remained high so far.
Lufthansa warned however that it expected a drop in 2009 sales, but Gemkow was quoted in a statement as saying the group was well positioned to weather the storm.
“We will see who is prepared and able to react effectively against these difficult conditions. Lufthansa is a strong company and can hold its course, even in difficult times,” he said.
The International Air Transport Association has forecast that the sector would post accumulated losses of $4.7 billion (3.5 billion euros) this year.
For 2009, the German flag carrier forecast “a considerable reduction” in operating profit, but Gemkow said it would “maintain a significantly positive operating result, even in this environment.”
The carrier has benefitted from a sharp drop in fuel costs, which shed 31% from the first quarter of 2008 to 739 million euros as prices fell and the number of passengers and amount of freight carried declined.
For 2009, Lufthansa foresees fuel costs of 3.4 billion euros, higher than a previous forecast of 3.2 billion but well below the 2008 level of 5.4 billion.
Lufthansa has already taken measures to deal with the slump by trimming capacity, cutting costs and placing workers on short-time work plans subsidised by the government.
Globally, the carrier has reduced passenger capacity by 1.1% on a 12-month basis, it said.
Its shares showed a solid gain of 3.37% to 9.66 euros in midday trading on the Frankfurt stock exchange, while the DAX index of leading shares was 2.50% higher overall.
The net loss was in part the result of an impairment charge of 140 million euros on Lufthansa’s 9.9 % stake in the Frankfurt airport operator Fraport.
Merck Finck analyst Robert Herberger told AFP investors were encouraged by the fact that Lufthansa still expected to post an operating profit this year.
He said analysts would listen closely during a telephone conference for updates on pending acquisitions of Austria Airlines, the British carrier bmi, and brussels airlines.
The German carrier awaits a green light from the European Commission for purchases of stakes in brussels airlines, and in Austrian Airlines which will provide access to a strong network of eastern European routes.
Lufthansa is also expected to raise its holding in bmi to 80 percent this year, and to launch Lufthansa Italia from Milan.
That will put it in competition with Italian carrier Alitalia for the third biggest European air transport market.
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First Published: Thu, Apr 30 2009. 04 55 PM IST
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