Lufthansa second-quarter profit jumps 28%

Deutsche Lufthansa AG said second-quarter profit jumped almost 28 per cent, beating estimates, as Europe’s second-biggest airline scrapped its weakest routes and introduced a 1.5 billion-euro (Dh6.75 billion) efficiency program. Operating profit rose to 361 million euros from 283 million euros a year earlier, Cologne, Germany-based Lufthansa said in a statement today. Analysts had anticipated a 226 million-euro profit, based on five estimates in a Bloomberg survey. “These are good numbers that reflect a solid cost-driven performance and better capacity restraint,” said Stephen Furlong, an analyst at Davy Holdings in Dublin with an “outperform” rating on Lufthansa. “It’s nothing stellar though and we’re still early on in the restructuring process.” Lufthansa has frozen capacity, terminated routes and begun a merger of administrative activities at its short-haul and Germanwings units in a drive to slash expenses. Chief Executive Officer Christoph Franz, who sold unprofitable U.K. unit BMI in the quarter, is still predicting a full-year operating profit in the “mid three-digit million euro range.” That’s before restructuring costs of 100 million euros to 200 million euros. Lufthansa was trading 2.6 per cent higher at 10.57 euros as of 10:41 a.m. in Frankfurt. The shares had advanced 15 per cent this year, valuing the company at 4.84 billion euros. Air France-KLM Group, Europe’s biggest airline, rose the most since its formation in 2004 on July 30 as the introduction of a 2 billion-euro savings plan helped halve its second-quarter loss, and has added 9.3 per cent this year. No. 3 International Consolidated Airlines Group SA, parent of British Airways, which concluded the purchase of BMI on April 19, is up 11 per cent. Lufthansa’s second-quarter revenue gained 6.4 per cent to 7.89 billion euros, while the carrier’s net income slipped 24 per cent to 229 million euros. During the first half, passenger traffic - or the number of people carried multiplied by the distance flown - rose 3.8 per cent across the group as capacity increased by 2.3 per cent, boosting seat occupancy 1 percentage point to 76.9 per cent. For the full year, Lufthansa plans to increase capacity 0.5 per cent, and there will be a 2.5 per cent reduction this winter versus a year ago, the company said on a conference call. Cargo capacity will be cut by 4.5 per cent for the year rather than the 2 per cent announced in May, and there’s no prospect of a recovery in freight volumes before the fourth quarter, Chief Financial Officer Simone Menne said. The airline defines its operating result as profit before interest and tax, adjusted for gains and losses related to assets and financial investments. From gulfnews