Lufthansa Buoyed By Austrian Restructuring

 

Lufthansa Buoyed By Austrian Restructuring

Lufthansa Buoyed By Austrian Restructuring

Lufthansa posted second-quarter operating profit that beat consensus thanks to one-off effects from the restructuring of its troubled Austrian Airlines carrier.

Operating profit for the three months to June rose by more than a quarter to EUR€361 million (USD$443.9 million), the German flag carrier said on Thursday.

Lufthansa said restructuring of Austrian Airlines led to a one-time earnings boost due to lower future obligations – such as anniversary awards, severance payments and pension payments – lifting operating earnings at the unit by EUR€82 million. It did not disclose quarterly figures for the unit.

Growth was also driven by the aircraft maintenance division, where operating profit more than doubled to EUR€82 million, due in part to the euro’s weakening against other currencies.

Group revenues rose 6.4 percent to EUR€7.89 billion.

Lufthansa posted a steep loss in the first quarter, blaming high fuel costs, and said it might only hit its profit target if costs from a new restructuring plan were excluded.

To improve earnings by at least another EUR€1.5 billion by the end of 2014, it sold loss-making British unit bmi and injected fresh equity capital into Austrian Airlines.

Lufthansa said it saw a recovery in demand for air cargo services in the fourth quarter of this year at the earliest, adding that freight volumes were still down year-on-year.

The carrier announced plans in May to cut 3,500 jobs as it grapples with high fuel prices, a weak economy and competition with fast-growing, low-cost airlines and Middle East carriers that are squeezing margins in the industry.

But even budget carriers are struggling to make money in the European debt crisis. Ryanair earlier this week undershot analyst forecasts with a quarterly profit slide of 29 percent as it grappled with a mix of austerity, recession and stubbornly high fuel prices.

EasyJet reported last week, though, that a surge in bookings by sun-starved Britons to leisure destinations such as Malaga in Spain and Faro in Portugal helped boost its quarterly revenue.

(Reuters)



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