Airline forecasts another rise in profit for the current year
Lufthansa Chairman and CEO Wolfgang Mayrhuber announced record net profit and revenue at today’s press conference on the company’s annual result. During the last year revenue increased by almost ten per cent to 19.8 billion euros, setting a new record. Group profit after tax also climbed to a new peak at 803 million euros. The operating profit was up by 46 per cent to 845 million euros. “We have a very satisfying result in every aspect to show for 2006. The figures speak for themselves and underline the successful course that has been set by the Lufthansa Group”, said Mayrhuber.
“The success of Lufthansa is based on the outstanding team performance of our employees, our coherent strategy, the consistent tapping of market potential, future-oriented investment policies and sustainable cost discipline.” Record levels of customer satisfaction and passenger figures have led to new jobs. “Our shareholders will also profit from this success, especially as the Lufthansa share price rose by 67 per cent in 2006”, commented Mayrhuber. He reiterated that the Executive Board and the Supervisory Board would be proposing a 20 cent higher dividend of 0.70 euros per share at the Annual General Meeting. The Lufthansa Group remains optimistic for the current year and is confident that it will again post an increase in operating profit.
The Lufthansa Chairman emphasised that the company had continued to focus on its core competencies during the past year. The Group will achieve book gains of approximately 500 million euros from the sale of its shares in Thomas Cook AG. “We are sharpening our Group profile and creating value for our shareholders”, explained Mayrhuber. All business segments recorded operating profit during the past year. The key business segment, passenger transportation, closed with a profit of 400 million euros, equivalent to a 200 per cent rise in earnings.
[GADS_NEWS]The Lufthansa CEO explained that, “the Group’s customers valued the consistent and targeted investments in the product” and added that, “while we continue to grow as a whole, there is a significant and steady rise in the number of passengers that are deciding to opt for First and Business class. Nonetheless, flying Economy with Lufthansa remains a choice for quality and one that is still very popular.” The new betterFly offer that was introduced throughout Germany in April was welcomed with open arms. During the last year, a record 53.4 million passengers flew with Lufthansa.
The incorporation of the quality carrier SWISS is progressing better and more rapidly than expected. Last year, the partnership’s overall synergies totalled more than 200 million euros and were significantly higher than the amount originally forecast. “Our customers profit from this strong partnership and the success of SWISS is already visible in the Group result.”
Wolfgang Mayrhuber stressed the role of aviation as a powerful engine for employment, growth and innovation in Germany. “We want to continue to grow and will be taking on 3000 new employees this year alone. This means that during 2006 and 2007 we will have generated 5500 new jobs, a figure equalled by hardly any other company in Germany.”
Mayrhuber made it very clear that in order to ensure continued growth, better infrastructure on the ground and in the air would be essential. “The harmonisation of air traffic control in Europe, the Single European Sky, will reduce and avoid holding patterns and cut delays, making it the largest consumer and environmental protection project in European aviation. Furthermore, sustainable global potential can be achieved through the deployment of state of the art technology, the optimisation of bureaucratic air traffic management on intercontinental routes and the use of biofuel.”
Referring to the one sided calls for European airlines to create a stand-alone solution for emissions trading, Mayrhuber underlined that, “the exclusive involvement of European airlines in emissions trading would result in considerable competitive disadvantages in our global industry and probably even increase emissions.” Although the aircraft is the most advanced environmentally friendly and economical form of transportation for distances in excess of 350 kilometres, the airlines have already taken the initiative and are already doing everything in their power to reduce fuel consumption and consequently emissions.
He pointed out that the costs of kerosene had almost doubled during the past two years and went on to add that, “we are willing and capable of doing more for climate protection, the question is not whether we will, but how we will.“ Nevertheless, Lufthansa is leading the market in terms of environmental protection, a fact that is supported by the Group’s membership in the Dow Jones Sustainability Index. Europe must take the current discussions as an opportunity to stand up for effective global solutions.
Annual figures 2006
The Lufthansa Group generated revenues of 19.8 billion euros in 2006, representing growth of 9.9 per cent. Traffic revenue increased by 10.4 per cent to 15.4 billion euros. There was a significant rise in the average yields during the reporting period. An increase of 5.2 per cent was registered across the board for all traffic segments. Other operating income dropped by 9.4 per cent to 1.4 billion euros, in comparison to last year. During the previous year, this entry still included higher book gains of around 245 million euros, mainly due to the sale of shares in Amadeus and Loyalty Partner.
The operating expenses rose by 6.9 per cent to 20.3 billion euros. The significantly higher cost of kerosene was again a major cost factor. A total of 3.4 billion euros was spent on fuel during the reporting period, equivalent to a year-on-year rise of 26 per cent or 693 million euros. Without the successful fuel price hedging measures, the Group would have spent an additional 150 million euros on fuel.
The Lufthansa Group improved its operating profit for 2006 by 46.4 per cent to 845 million euros. The Group result after tax rose by 77.3 per cent to a new record level of 803 million euros. Investments increased to 1.9 billion euros and, as during the previous years, could once again be financed entirely from cash flow. The Group increased operating cash flow by 7.6 per cent to 2.1 billion euros.
At the end of the year, cash and cash equivalents outweighed the financial liabilities by 101 million euros (previous year: 143 million euros).
The full Annual Report for the financial year 2006 is posted on www.lufthansa-financials.com.
