Lufthansa cuts losses as demand for air travel increases
German flag carrier Lufthansa said it cut losses in the first quarter of 2022. However, the airline also warned that rising aviation costs would be passed on to customers.
Lufthansa cuts its losses in the first quarter of 2022
On Thursday, Lufthansa revealed that it had managed to reduce its net losses in the first quarter of 2022, from around one billion euros in the last quarter of 2021, to around 584 million euros.
In the first quarter of 2022, Lufthansa saw passenger numbers more than quadruple to around 13 million, up from three million in 2021 when the coronavirus pandemic led to major restrictions on air travel. Demand has particularly increased among leisure travellers, with Lufthansa CEO Carsten Spohr saying “new bookings are increasing week by week”. Lufthansa is convinced that more people are expected to fly from German airports with the airline this summer for their holidays than ever before.
The recovery in business travel has been significantly slower, with Lufthansa expecting traffic to reach around 70% of pre-coronavirus capacity this year. However, the airline’s cargo division posted a “record result” in the first quarter of 2022, due to increased demand for cargo amid ongoing issues with global supply chains. This translated into an operating profit of 495 million euros, up from 315 million euros recorded in the first quarter of 2021.
In total, Lufthansa plans to return to “around 75%” of its pre-coronavirus capacity by the end of the year.
Lufthansa will pass on higher costs to its customers
The coronavirus pandemic has taken a heavy toll on the Lufthansa Group, which includes Eurowings, Austrian Airlines, SWISS and Brussels Airlines, which was only saved from bankruptcy by a government bailout. In a bid to save money, Lufthansa has been shedding a significant number of jobs during the pandemic, with 30,000 positions cut since 2020. Lufthansa said late last year that it still planned to cut another 3,000 jobs.
Lufthansa chief financial officer Remco Steenbergen said he expects the airline group’s financial situation “to improve further in the coming quarters”. However, Steenbergen warned that customers will face higher ticket prices due to rising operating costs, as the skyrocketing price of jet fuel (following the Russian invasion of Ukraine) could have an unpredictable effect on the year-end result.