Transatlantic strength makes Lufthansa confident on travel demand
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Record cargo profits, good demand on transatlantic routes and pent-up travel demand. After a profitable third-quarter, Lufthansa (LHAB) (LHA) is preparing for a strong finish to 2022 and is working on plans to bring more Airbus A380s back for summer 2023.
The German airline’s chief executive said a lack of capacity, driven by aviation staff shortages and supply chain bottlenecks that have resulted in delayed aircraft deliveries, would help ensure continuing good demand for its flights.
“It’s basically impossible to obtain a cockpit window for the 787,” Carsten Spohr told analysts on a third quarter results call on October 27, 2022.
Spohr said that Lufthansa’s (LHAB) (LHA) business travel revenues were at 70% of pre-crisis levels and that supply chain shortages were even helping to drive business trips, because it meant people were having to travel to establish and maintain customer and supplier relationships.
“The industry-wide personnel shortages of the past summer have not yet been fully overcome,” Spoh added. “On the visiting friends and family front, one summer was surely not enough to release all the demand being built up during the pandemic.”
For the fourth quarter, Lufthansa (LHAB) (LHA) is planning to operate around 80% of its pre-pandemic capacity. Like other major European carriers, Lufthansa (LHAB) (LHA) is not seeing the rising cost of living and inflation impact bookings just yet. Spohr said that booked load factors for the fourth quarter were already higher than pre-crisis and that premium bookings were strong, helping to boost yields.
“Revenues generated in the US are up 15% compared to 2019 levels, which is all the more remarkable given capacity on the transatlantic is 20% below pre-pandemic,” he summarized.
Return of the A380
Lufthansa (LHAB) (LHA) is going to bring back three A380s out of storage to serve flights from its second largest base in Munich (MUC) for summer 2023.
Spohr said that was just the beginning and the company was working on detailed plans to reactivate more of the superjumbos. “We’ll need to bring that number up from the demand we see. And also for operational reasons, three is not enough.”
“And you should book now if you want to fly it because our passengers love it!” Spohr exclaimed.
Will it be another record year for cargo?
Lufthansa (LHAB) (LHA) achieved adjusted earnings before interest and tax (EBIT) of €1.1 billion ($1.1 billion) in the third quarter, up from €251 million ($252 million) one year ago. The group said it also expected to be profitable in the fourth quarter, even though airlines typically experience a slowdown in business during the winter months.
Lufthansa (LHAB) (LHA) doubled its profit forecast earlier in October thanks to strong travel demand, meaning it now expects profit of over €1 billion for the year as a whole.
On the air freight side, Lufthansa Cargo has already achieved profit of €1.3 billion so far in 2022 and annual profit is expected to beat 2021’s record of €1.5 billion, the group said.
With cargo demand slowing after enjoying record demand during the pandemic, chief financial officer Remco Steenbergen said Lufthansa (LHAB) (LHA) had “optimistic” goals for cargo in 2023, although admitted it would likely be at a lower level of profit.
source: Aero Time
