Lufthansa returns to profit amid extended summer travel boom
Lufthansa (LHAB) (LHA) is enjoying an extended summer travel boom. The German airline group returned to profit in the third quarter thanks to easing travel restrictions and says demand is looking good for the rest of the year.
“The crisis is obviously not over yet, but we are making tremendous progress on our way to emerging from this crisis as a stronger company,” Chief Executive Carsten Spohr commented on a call with analysts on November 3, 2021. “We are another step closer to recovery.”
The German airline group said new bookings are back at 80% of pre-crisis levels and it also expected to make an operating profit in the final quarter of the year.
“We see the summer travel season lasting into the fall and even the winter,” Spohr said. The chief executive said bookings had been given a boost by news that the United States will be easing travel restrictions on November 8, 2021. Transatlantic bookings are also at 80% of pre-pandemic levels, he said.
In another boost for the group, Spohr said Lufthansa (LHAB) (LHA) was seeing a shift towards bookings in premium classes. Meanwhile, bookings from corporate customers are at 40% of pre-crisis levels and recovering faster than expected, he added.
For the fourth quarter, Lufthansa (LHAB) (LHA) intends to increase capacity to 60% of 2019 levels from 50% in the third quarter. For the first quarter of 2022, this will increase to around 65% and then to 80% in the summer and second half of 2022.
Spohr said Lufthansa (LHAB) (LHA) was ready to increase capacity further if needed, such as if China opened up sooner than expected. The group currently has 498 active aircraft and is preparing to bring a further 60 out of storage for summer 2022. Spohr said it may reach its long-term target of having 650 active aircraft sooner than expected given the strong recovery seen so far.
In the third quarter, revenue at Lufthansa Group rose 96% and it reported adjusted earnings before interest and tax (EBIT), excluding restructuring expenses, of €272 million ($315 million), a big swing from a loss of €1.2 billion ($1.4 billion) in the third quarter of 2020.
The results were helped by another record profit at its air freight division, Lufthansa Cargo, which reported adjusted EBIT of €301 million ($349 million). Spohr expects the favorable supply and demand environment for air cargo to continue into 2022 and even beyond.
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