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Lufthansa's cargo segment makes profit but group's net earnings widen

LUFTHANSA's cargo and logistics business returned to the black at an operating profit level in the first quarter as it led the company to its best performance for the period since 2008.

The airline group's logistics division, which includes Cargo, time:matters and other cargo related shareholdings, saw revenues increase by 18.5 per cent year on year to EUR569 million (US$620 million).

Earnings before interest and tax (Ebit) returned to the black for the first time since the first quarter of 2015, when the industry enjoyed a boost from strikes at US west coast ports, reaching EUR33 million against a loss of EUR19 million last year, according to London's Air Cargo News.

The improved results came on the back of improvements in cargo demand and load factors - cargo traffic at the logistics division was up by 6.3 per cent year on year to 2 billion revenue cargo tonne km (RCTK), while load factors improved to 70.1 per cent compared with 67.8 per cent last year.

Lufthansa said the revenue increase was due to "volumes and pricing" while its strategic cost-cutting programme is underway with the first activities successfully completed.

Operating expenses were up by 6.9 per cent to EUR55 million driven by the extra volumes and increased fuel costs.

The overall airline group saw revenues improve by 11.2 per cent year on year to EUR7.7 billion, EBIT was up 10.9 per cent to EUR5.8 billion but the net result slipped to a loss of EUR68 million against an EUR8 million loss last year.

While net profits declined, the group played up the fact it was the first operating profit registered for the period since 2008, with the airline attributing the improvement to its cargo and technical businesses.

"We have continued on our successful track in the first quarter of this year and achieved another good result," said Ulrik Svensson, chief financial officer of Deutsche Lufthansa.

"For a period that is traditionally difficult for the airline industry, we have posted our first positive earnings result since 2008.

"This is mainly attributable to favourable trends at Lufthansa Cargo and strong growth at Lufthansa Technik. This demonstrates the strength of our broad setup as an aviation group."

Other highlights for the logistics division during the period include the start-up of its partnership with Cathay Pacific and it also started the expansion of its cool centre.

The strongest growth in cargo traffic came from the Asia Pacific region, up 9.4 per cent year on year to 932 million RCTK, while Americas improved by 6.2 per cent to 894 million RCTK, Europe was up 1 per cent to 81 million RCTK, and Middle East/Africa declined by 7.8 per cent to 140 million RCTK.