Deutsche Lufthansa, the top European airline group, has warned of stagnant earnings in 2024, with a predicted enlargement in their first-quarter loss compared to last year. This disappointing outlook is due to ongoing strike disturbances and the receding of a freight surge that emerged in the Covid-19 period.
Last year, the group chalked up adjusted earnings before interest and tax of €2.68 billion, an improvement from the previous year’s €1.52 billion. Consequently, the operating margin hovered around 7.6 per cent, just shy of their desired 8 per cent margin.
The corporation intends to distribute 20 – 40 per cent of its profits through a 30 cents a share dividend payout. Strike action has repeatedly hindered the airline’s operations, reflected by a recent two-day strike triggering flight cancellations across Germany. This revived outburst of workforce disputes echoes previous drawn-out conflicts Lufthansa had with entities such as pilots pre-pandemic. Employees are once more demanding a larger share of the generated profits from the increasing demand.
In Thursday’s Frankfurt trading, Lufthansa’s stock practically remained static. The shares have reduced by 12 per cent since the year began, qualifying the group as the poorest performing European airline in Bloomberg’s Airlines Index over this span.
Lufthansa is determined to secure a share in ITA Airways, Alitalia’s successor. However, the process is stalled due to competition inspections from Brussels. If successful, ITA Airways would expand the group’s existing national airlines portfolio, which already encompasses Austria, Switzerland, and Belgium carriers.
While the first-quarter adjusted operating loss is forecasted to surpass last year’s €273 million deficit, Lufthansa anticipates demand for flights to remain high, indicated by the superior load factor for the following quarter. However, despite projecting a capacity surge to 94% of its 2019 numbers – a step up from their 84% capacity last year – that figure stands one percent short of their November prediction.
The final one of the three primary airline conglomerates in Europe to disclose its 2023 results is the enterprise in question. A week ago, both Air France-KLM and IAG – the latter being Aer Lingus and British Airways’ parent company – revealed their statistics. Both businesses voiced concerns about potential sluggish growth in certain areas this year due to geopolitical unrest causing public aversion to flying and corporate travel not yet reaching the levels seen before the pandemic.
Lufthansa made headlines last month as it undertook a thorough overhaul of its executive board with four out of the six members stepping down, which notably included Chief Financial Officer Remco Steenbergen. – Lufthansa