News / Cargo revenue surge gives Lufthansa Q1 results a welcome lift

Lufthansa’s logistics division enjoyed a revenue surge of 18.5% in the first quarter, helping to drive better results for the airline group.

Revenue at the division, which includes Lufthansa Cargo, rose to €569m, leading to an EBIT of €33m, against a loss of €19m in the same period last year.

The carrier group saw overall revenue rise 11.2% to €7.69bn, resulting in an adjusted EBIT of €25m, but a net loss of €68m. The revenue gains were in part due to the consolidation of Brussels Airlines into the results.

Available cargo tonne km (AFTKs) rose 2.9% to 2.9bn, while revenue cargo tonne km went up 6.3% to 2bn. Load factors increased to 70.1% from 67.8% a year earlier.

Lufthansa Cargo saw revenue growth in all markets except the Middle East, which stayed flat. Europe rose 9.5% to €46m, the Americas grew 17% to €226m and Asia Pacific went up nearly 20% to €44m. The carrier reduced AFTKs in both Europe and the Middle East.

The carrier’s strategic cost-cutting programme is under way and the company noted that the first phase had been successfully completed, although operating expenses rose 6.9% to €555m – “primarily due to volumes and fuel-driven increases in the cost of materials and services”.

CFO Ulrik Svensson said: “We have continued on our successful track in the first quarter of this year and achieved another good result. For a period that is traditionally difficult for the airline industry, we have posted our first positive earnings result since 2008.

“This is mainly attributable to favourable trends at Lufthansa Cargo and strong growth at Lufthansa Technik. This demonstrates the strength of our broad setup as [an] aviation group.”

He added: “We are seeing positive developments in the pricing environment and significantly higher traffic revenues. At the same time, however, we cannot be satisfied with the cost development of our airlines. So we will continue to keep a clear and consistent focus on cost.

“Our positive earnings development in the first quarter was boosted by non-operating results. It is important that, even without these, we would still have reported an improved first-quarter result.”

The group warned that protectionism may be a future risk.

“Increasing protectionism and efforts by various governments to regulate or restrict free markets, may lead to slower growth or even to contraction scenarios.”

Brexit, it added, was a mixed bag.

“Uncertain outcome of Brexit negotiations may impede access to UK market. Traffic rights between the EU and UK may have to be completely renegotiated, which may lead to stronger growth and competition from UK airlines.

“However, there is also a chance that companies and institutions [will] increasingly move from Britain to Germany, accompanied by stronger demand from Lufthansa Group’s home markets.”

The carrier has not changed its full-year forecasts. You can see the full results here, and the quick version here.