Strike Hurts Lufthansa in 2016

Strike Hurts Lufthansa in 2016

Strike Hurts Lufthansa in last year performance. The adjusted EBIT of the Lufthansa Group fell by 3.6% to USD 1.89 billion in 2016, as revenues contracted by 1.2% to USD 34 billion.

The airline group says the reduction in revenue reflects a USD 108 million  impact of the industrial action of the pilots in November and improved its profitability.

"In a very demanding market environment, we have successfully maintained the margins of the Lufthansa Group at record levels of previous years, through consistent capacity and management measures and, above all, through our effective cost reductions" , Said Carsten Spohr.

The adjusted EBIT margin decreased 0.2 percentage points to 5.5%. Unit costs excluding fuel and currency effects declined 2.5%, according to the group.

Without adjustment, EBIT increased 36% to USD 2.45 billion. "The agreed change from a defined benefit system to a defined contribution pension system had a positive impact of USD 701 million on EBIT for the year, which is not included in adjusted EBIT," says Lufthansa.

He added that investments were 13% lower at USD 2.4 billion, or USD 322 million less than previously forecast - "largely due to delays in new aircraft deliveries."

The adjusted EBIT of the Lufthansa passenger airline group grew to USD 1.6 billion, resulting in Lufthansa's main line increasing from USD 273 million to USD 1.23 billion.

Austrian Airlines' adjusted EBIT grew from USD 6.5 million to USD 62 million, while the Swiss EBIT decreased by USD 16 million to USD 445 million.

The Eurowings budget unit suffered a loss of USD 98 million, after a positive USD 41 million in 2015. The group states: "More than half of the deficiencies can be attributed to start-up costs and other non-recurrent costs."

Lufthansa Cargo went to a loss of USD 54 million - after an adjusted EBIT of USD 80 million the previous year - in the midst of "significant price declines ... in the face of enormous overcapacities."

By 2017, the group expects the adjusted EBIT to decrease "slightly".

The unit costs of passenger airlines, excluding the effects of fuel and currency, will be reduced 'at approximately the same level as in 2016'. But Lufthansa warns that the USD 376 million increase in the group's fuel bill and the reduction in unit revenues it expects are "unlikely to be fully offset by further reductions in unit costs."