Profit fall for German carrier Lufthansa

Adjusted earnings before interest and taxes (EBIT) of Lufthansa declined by 4 percent to 2.8 billion euros (3.2 billion U.S. dollars) in the fiscal year 2018, Germany’s largest airline announced on Thursday.

According to Lufthansa, the decline in profits was mainly due to higher fuel costs, which increased by around 850 million euros, as well as significantly higher expenses of around 518 million euros caused by delays and flight cancellations.

One-off effects from integrating aircraft of Air Berlin into the Lufthansa fleet weighed with an additional 170 million euros on Lufthansa’s profits in 2018. Lufthansa had acquired several airplanes from Air Berlin, after Germany’s former second largest airline filed for insolvency in 2017.

Carsten Spohr, chief executive officer (CEO) of Lufthansa, emphasized that “2018 was another successful year for the Lufthansa Group in financial terms. We generated the second-best result in the history of our company.”

The introduction of the international financial reporting standard IFRS 15 also “burdened” total revenues of Lufthansa which moderately grew by 1 percent to a total of 35.8 billion euros.

In the fiscal year 2019, Lufthansa is planning to focus on a “sustainable quality growth” and the German airline is expecting revenues to grow in the mid-single digit percentage range. In addition, cost reductions would offset increasing fuel costs, which Lufthansa expected to rise by a further 650 million euros in 2019.

On Wednesday, Lufthansa announced that it would sell 6 of its 14 Airbus A380 airplanes back to manufacturer Airbus for “economic reasons” by 2023. The parties have agreed not to disclose the purchasing price of the airplane and the transaction would not affect the group’s earnings performance, according to Lufthansa.

Following the decision by Emirates to significantly reduce its order of A380 airplanes, Airbus announced in February that it would end the production of the largest civil aircraft ever built in series.

After the publication of the airline’s annual results Thursday, Lufthansa shares temporarily dropped by over five percent and were by far the biggest loser in the German stock index DAX.