Frankfurt (Germany) (AFP) – German airline giant Lufthansa said Thursday its 2024 profits dived during a turbulent year marked by strikes, rising costs, and delays in aircraft deliveries, but vowed a turnaround plan will boost earnings this year. European rival Air France-KLM also reported a big drop in its annual net income as some tourists avoided Paris during the Olympic Games last summer.
Lufthansa reported a net profit of 1.38 billion euros ($1.49 billion) last year, down 18 percent from 2023. Revenue rose slightly to 37.6 billion euros. “Strikes weighed on the passenger airlines,” Lufthansa said in a statement. It also pointed to problems caused by “significantly higher costs, especially in Germany” as well as “further delays in aircraft deliveries.” The result was nevertheless better than a forecast of just over one billion euros by analysts surveyed by the financial data firm FactSet. It came after a two-year streak of improving earnings for one of Europe’s biggest aviation groups, whose carriers include Lufthansa, Eurowings, Austrian, Swiss, and Brussels Airlines.
Like other airline groups, Lufthansa was hit hard when the Covid pandemic shut down global air travel, and it had to be bailed out by the German government in 2020. It recorded two years of losses before flying strongly back into profit as demand roared back when lockdowns were lifted. Air France-KLM said its net profit fell almost threefold to 317 million euros from 934 million in 2023 due to the Olympics effect. Its revenue rose 4.8 percent to 31.5 billion euros. The Franco-Dutch group said the Paris Olympic Games cost the company 200 million euros in lost revenue as tourists decided to avoid the capital, plus 50 million euros in staff bonuses. Other factors included rising costs and a strong dollar.
– Upbeat outlook – Lufthansa’s poor results for 2024 came despite a seven-percent increase in passengers to 131 million. For 2025, Lufthansa gave an upbeat outlook, saying it was aiming for operating profits that were “significantly higher” than last year. The group’s 2024 operating profit — a key figure that indicates a company’s underlying health — fell nearly 40 percent to 1.6 billion euros compared to the previous year. A turnaround programme launched last year for its flagship carrier, aimed at making hefty savings in the years ahead, will “lay the foundation for a sustainable increase in earnings,” it pledged.
Lufthansa faced substantial turbulence in the first half of 2024 when it was hit by a wave of strikes as workers pushed for higher pay to combat inflation. The group’s ground staff and cabin crew staged repeated walkouts, which Lufthansa slammed as “uncompromising” and said risked “damaging our guests, the company, and ultimately our employees.” Its problems worsened later in the year due to a string of issues, including weak market conditions and delayed aircraft deliveries. The Hamas-Israel war and broader tensions in the Middle East had an impact, forcing Lufthansa and Air France on occasion to suspend flights to and from several destinations in the region.
The German group has also blamed EU climate regulations, particularly rules related to sustainable aviation fuels, for increasing costs, and last year introduced an environmental charge for fares in Europe to compensate. There has been some good news, however. Lufthansa in January finalised an agreement with Italy to acquire a minority stake in ITA Airways, the state-owned carrier born from the ashes of Alitalia. Lufthansa has operational control of ITA and will gradually increase its holding in the carrier to 100 percent. “The complete integration of ITA Airways is expected to be completed after just 18 months,” Lufthansa said Thursday.
© 2024 AFP
