The Lufthansa Group as a whole has reported a notable loss for the first quarter of 2019. However, separately, most of the airlines have performed badly, with low cost carrier Eurowings even being forced to cut capacity growth from 2% for this year to 0%.
Lufthansa alone has reported an 80% worse loss than what was previously expected, citing fuel costs and tough competition as the key factors.
With shares falling almost 5%, Lufthansa reported an adjusted loss before interest and tax of €336 million ($380 million).
The carrier's CFO, Ulrik Svensson, assured: "Overcapacities, especially on short- and medium-haul European routes, substantially depressed our first-quarter earnings."
He continued, "We are confident, though, that we will see a recovery in our unit revenues as early as the second quarter. Our confidence is based above all on our favourable booking levels for the months ahead.”
The announcement comes shortly after Lufthansa revealed its plans to cut growth to optimise its network as a result of a slide in fares and rising fuel costs. The move was also partly due to the lack capacity available at airports around the globe, limiting growth.
Photo: AeroNewsX/Daniel Klaffke
But Lufthansa is not the only carrier within the group that is struggling. In fact, Austrian Airlines also revealed a striking loss, which was much worse than compared to the negative figures reported in the same period last year.
Photo: AeroNewsX/Chris de Breun
Read More: https://aeronewsx.wixsite.com/news/home/austrian-airlines-reports-deeper-loss-for-first-quarter
And of course, the troubles don't end there. Lufthansa's low cost arm Eurowings, has been forced to cut its capacity growth plans to 0% for 2019, after it published an operating loss of €257 million for the first quarter. This is compared to a €218 million operating loss the year before, which Lufthansa blamed on the high integration and startup fees related to acquiring part of AirBerlin.
Lufthansa noted that short haul performance was worse because capacity did not match demand.
Read more: https://aeronewsx.wixsite.com/news/home/eurowings-reports-eur257-million-loss-for-first-quarter
Swiss International Airlines also reported a 'substancial decrease' in earnings for the first quarter of 2019. The airline published 2% lower revenue figures amounting to CHF 1.16 billion compared to CHF 1.18 billion the previous year.
Photo: AeroNewsX/Dario Duppenthaler
Michael Niggemann, SWISS’s Chief Financial Officer said: “In response to the high capacities in Europe, we have reduced our own capacity growth, and are seeing encouraging booking levels for the quarter ahead. The continuing strong demand on our long-haul routes is making a major contribution here. We remain confident that we will still achieve our target of a double-digit Adjusted EBIT margin for 2019 as a whole.”
The carrier's overall operating profit stood at CHF48.3 million.
Part of SWISS' financial report read: "Higher fuel prices depressed first-quarter earnings far more substantially than they had the previous year, while industrywide overcapacities in Europe put sizeable pressure on fares. Having been favourably impacted by the demise of Air Berlin and the ensuing removal of market capacity, the first-quarter results for the prior-year period also served as a high benchmark, against which unit revenues for 2019 suffered a year-on-year decline. The 2019 first-quarter period further brought an increase in maintenance costs, as a result of the large number of the more extensive periodic C Checks which had to be performed. And last but not least, the first signs were seen of declining market trends in the cargo business, especially on routes between Europe and Asia."
Combined, the Lufthansa Group did collectively do slightly better: Overall profits for the first quarter stood at €7.9 billion, which was a 3% increase compared to the same period last year.
However, of course it wasn't all good. The total loss was slightly recovered thanks to the long haul performance of the majority of the carriers - net income declined to a loss of €342 million compared to a loss of €39 million the previous year. Net debt stands at €5.9 billion for the group.
Even on the cargo side, things weren't looking good - Lufthansa Cargo's operating profit decreased by a staggering 67% citing low demand between Europe and Asia.
Photo: AeroNewsX/Daniel Klaffke
The Lufthansa Group is struggling. With losses from almost half of the airlines within the group, all carriers have a lot to work on. But the Lufthansa Group carriers aren't the only airlines in trouble: Hawaiian Airlines also reported terrible figures for the first quarter and it may get worse after Southwest Airlines begins normal operations to and within Hawaii.
So the aviation industry as a whole has some issues or another. Norwegian facing a huge crisis with its 787s and 737 MAX fleet, Hawaiian Airlines struggling to keep up with competition and carriers all around the world facing a global pilot shortage. With many carriers in the red, should we be expecting lots more to go bust?