Parked Lufthansa aircraft at Frankfurt Airport. With renewed warning strikes by several professional groups, the Verdi union is paralyzing important parts of German air traffic on Thursday and Friday. picture alliance/dpa | Lando Hass
Lufthansa achieved the third-highest profit in its history in 2023, but no further big jumps are in sight. Shareholders can look forward to a dividend of 30 cents per share, the first since 2018. At the same time, ground staff are currently on strike for a wage increase of 12.5 percent.
The return of the desire to travel and higher ticket prices gave Lufthansa the third-highest profit in its history last year. But no further big leaps are in sight. In the middle of the strike by ground staff, CEO Carsten Spohr only promised an operating result at the previous year’s level for the current year in Frankfurt on Thursday. The increase in ticket prices is likely to have stopped for the time being, and the number of tickets sold will probably not return to pre-pandemic levels in 2024. However, shareholders can look forward to a dividend again.
Lufthansa boss Spohr sees the group back in its old financial strength after the struggle for survival during the bird flu pandemic. Last year, Lufthansa generated an operating profit of almost 2.7 billion euros before special items – around 76 percent more than in the previous year, which was still characterized by the pandemic. Only in 2017 and 2018, around the bankruptcy of its then rival Air Berlin, did the group earn more in day-to-day business.
Record profits on the one hand – strike on the other
In the midst of the ground staff’s warning strike, Lufthansa is still only cautiously optimistic about the future.
The company wants to bring the strike-happy employees back to the negotiating table as quickly as possible, also because the labor disputes have already cost around 100 million euros in profits this year. During the presentation of the balance sheet, striking technicians, counter staff and administrative employees marched in front of the company headquarters at Frankfurt Airport to demonstrate for higher salaries. The strikes are set to continue on Friday.
“The union’s strategy currently appears to be escalation,” said Human Resources Director Michael Niggemann, who is responsible for more than 100 collective agreements with various professional groups within the group. The lawyer cannot fully understand that there are currently strikes in many parts of the company. He points to salary increases in the past, profit sharing of around 500 million euros last year and what he says are “above-average and agreeable” collective bargaining agreements. He says: “We offer some of the best conditions in the industry. But costs must remain competitive.”
Niggemann also called on the cabin union UFO, which was ready to strike after a successful strike vote, to negotiate. Last-minute exploratory talks apparently did not lead to a rapprochement, meaning that a strike by around 19,000 flight attendants next week is becoming increasingly likely.
Unlike in 2022, the passenger business again contributed the lion’s share of profits in 2023. The group’s own passenger airlines returned to the black with an adjusted operating result of two billion euros, after having made a loss of 300 million euros in the previous year. The subsidiaries Swiss, Austrian, Brussels and Eurowings also achieved record results, as did the maintenance division Lufthansa Technik. The board canceled the planned partial sale of the maintenance subsidiary in the fall.
Meanwhile, the Lufthansa Cargo freight division was unable to match the record results of the pandemic years. While she had earned 1.6 billion euros in daily business in 2022, this time it was only 219 million euros. The recovery in global passenger traffic meant that there was significantly more space available in the cargo holds of passenger aircraft. The prices for air freight transport have therefore fallen significantly.
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Increase in Lufthansa passenger numbers in 2023 – flight tickets became six percent more expensive
Airline tickets, on the other hand, became more expensive again, also because the airlines’ seating capacity could hardly keep up with the increased demand. The Lufthansa Group airlines transported around 123 million passengers last year, around a fifth more than in 2022. According to the information, the average revenue per ticket increased by around six percent.
However, according to the Management Board’s assessment, this trend will not continue in the current year. Lufthansa boss Spohr expects at best stagnating unit revenues in the passenger business. The average cost per seat should also remain stable – although the ground staff are on strike this Thursday and Friday for higher wages and the flight attendants are also at risk of going on strike.
At the group level, Spohr is targeting an adjusted operating profit for 2024 at the level of 2023 – around 2.7 billion euros again. He wants to further expand the entire range of seats with additional new aircraft. Nevertheless, according to the plans, it should only reach around 94 percent of the pre-Corona level of 2019. Last year it was 84 percent.
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First dividends since 2018 for Lufthansa shareholders – staff go on strike for higher wages
After several zero rounds due to the pandemic, shareholders can expect a dividend again from 2023. The bottom line is that the group earned almost 1.7 billion euros, twice as much as the year before. Shareholders are to receive a dividend of 30 cents per share. Lufthansa last paid out part of its profits in 2018 – at that time the dividend was 80 cents per share.
According to its own information, the ongoing warning strikes at Lufthansa have cost the company around 100 million euros so far in the current year 2024. In addition, many customers held back on bookings, said CFO Remco Steenbergen on Thursday at the balance sheet presentation in Frankfurt. Human resources director Michael Niggemann called on the unions to return to the negotiating table. Only there could solutions be found.
In the ongoing tariff dispute, Verdi is demanding 12.5 percent more money, but at least 500 euros per month for a term of twelve months. There should also be a group-wide uniform inflation compensation of 3,000 euros. Lufthansa has so far offered ten percent more salary for a term of 28 months as well as inflation compensation. The next round of negotiations is scheduled for March 13th and 14th.
AA/dpa