Lufthansa Stock Up On Q4 Profit, FY23 View For Improved Earnings

Shares of Deutsche Lufthansa AG were gaining around 6 percent in the morning trading in Germany after the flag carrier reported Friday a profit in its fourth quarter, compared to last year’s loss, benefited by significant demand growth in air travel. Fiscal 2022 revenue almost doubled, and the airline projects further significant improvement in fiscal 2023 adjusted EBIT as demand for air travel remains high.

Meanwhile, first-quarter adjusted EBIT is expected to be negative. In line with regular seasonality, earnings are expected to be particularly strong in the second and third quarters.

The company also sees further progress towards achieving the targets set for 2024, such as adjusted EBIT margin of at least 8 percent and Adjusted ROCE of at least 10 percent.

In 2022, the company generated an adjusted EBIT of 1.5 billion euros, compared to last year’s negative 1.7 billion euros, despite high cost inflation, especially regarding fuel costs. The Adjusted EBIT margin improved accordingly to 4.6 percent from previous year’s negative 9.9 percent. Lufthansa Group nearly doubled its revenue to 32.8 billion euros, and passenger numbers more than doubled to 102 million passengers.

Carsten Spohr, CEO of Deutsche Lufthansa, said, “Lufthansa is back. In just one year, we have achieved an unprecedented financial turnaround. With an operating profit of 1.5 billion euros, the Lufthansa Group has achieved a much better result than expected. Demand for air travel remains high in 2023. We are investing billions in new fuel-efficient and state-of-the-art aircraft.”

For the new year, Lufthansa expects demand for air tickets to remain strong, mainly during the Easter and summer vacation periods.

Citing the continued robust demand, the company expects capacity to increase to around 85 to 90 percent on average compared with 2019. In the first quarter, capacity will be around 75 percent of pre-crisis levels.

Further, the company said it continues to evaluate the sale of non-core assets. AirPlus and LSG’s remaining catering business, following the sale of the European part, will be sold as soon as market conditions permit.

Lufthansa is also proceeding with preparations for a possible partial divestiture of Lufthansa Technik according to plan as talks with selected investors have already begun.

Lufthansa Group and the Italian Ministry of Economy and Finance, following the signing of a letter of intent, are currently negotiating exclusively on the form of a potential investment in the Italian airline ITA Airways.

On Thursday, Lufthansa Group ordered 22 latest-generation long-haul aircraft for a total list price of $7.5 billion. The orders were placed for ten Airbus A350-1000s, five Airbus A350-900s and seven Boeing 787-9s.

In its fourth quarter, Lufthansa Group’s net income was 307 million euros, a significant improvement from previous year’s loss of 314 million euros. Earnings per share were 0.26 euro, compared to loss of 0.45 euro a year ago.

Adjusted EBIT was 575 million euros, compared to last year’s loss of 42 million euros. Adjusted EBIT margin improved to 6.5 percent from prior year’s negative margin of 0.7 percent.

Lufthansa revenue for the quarter climbed 52 percent to 8.88 billion euros from last year’s 5.83 billion euros due to the strong increase in demand for air travel.

In Germany, Deutsche Lufthansa shares were trading at 10.41 euros, up 5.6 percent.

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