Lufthansa’s Logistics revenue falls 16%

Lufthansa Group today reported 7.4 billion euros ($7.9 billion) in operating revenue for the first quarter of 2024, an increase of 5% from the same period last year. Revenue in the company’s Logistics segment, which includes Lufthansa Cargo , fell 16% year over year to $738 million. [caption id="attachment_57131558" align="alignright" width="300"] (Courtesy/Lufthansa Cargo)[/caption] THE BIG PICTURE: Lufthansa’s cargo operations continued to suffer from high capacity and low demand , though its figures are beginning to normalize from the highs of 2022. Despite decreased revenue in the Logistics segment, Lufthansa Group’s earnings were buoyed by its Passenger Airlines and MRO segments. The Logistics segment comprises: Lufthansa Cargo; Jettainer ; time:matters Group ; Heyworld ; CB Customs Broker ; and The group’s 50% stake in AeroLogic . BY THE NUMBERS: Lufthansa posted an adjusted EBIT loss of $906.8 million in Q1 2024, compared with a loss of $291.6 million in Q1 2023. Also in Q1 2024: Net loss was $783.9 million, compared with $498.8 million in Q1 2023; Loss per share was 64 cents, compared with a loss of 42 cents in Q1 2023; There were 98,739 employees as of March 31, a 12% reduction YoY; Capacity was 3 billion available cargo tonne kilometers (CTK), up 7% YoY; There were 1.9 billion revenue CTKs, up 10% YoY; and Cargo load factor was 63.3%, up 2.1 percentage points YoY. WHAT THEY’RE SAYING: Cargo yields were lower by about 25% YoY due to the high demand experienced in Q1 2023 resulting from “high demand due to supply chain disruptions and the shortage of capacity as a result of the pandemic,” the earnings report stated. Lufthansa Cargo achieved an adjusted EBIT loss of $23.5 million in Q1, compared with an adjusted EBIT loss of $161.2 million during the same period in 2023. “The quarterly result was slightly positive,” the earnings report stated about Lufthansa Cargo’s results. STATE OF PLAY: As Lufthansa negotiated with multiple employee unions, the carrier group faced strikes, which Lufthansa said impacted Q1’s earnings by about $373.7 million. “We are now leaving the first quarter behind us, which was mainly impacted by strikes, and are at a turning point,” Chief Executive Carsten Spohr said in the earnings report. “We have reached long-term wage agreements for the majority of our employees.” The Employers’ Federation for Air Transport Companies (AGVL) and trade union ver.di reached a wage agreement for approximately 20,000 ground staff on March 28 after arbitration. The wage agreement has a term of at least two years and offers average wage increases of about 12.5% in two phases, as well as the payment of inflation compensation bonuses totaling $3,200. During the negotiation phase, ver.di led several strikes. Lufthansa also reached an agreement with AGVL and the cabin staff union Unabhangige Flugbegleiter Organisation (UFO) on April 11. UFO held a two-day strike during Q1. “We cannot be satisfied with the operating result for the first quarter,” Chief Financial Officer Remco Steenbergen said. “At more than [$373.7 million], the various strikes had a significant impact on our result. Nevertheless, cash flow was positive due to the continuing high demand for air travel.” FLASHBACK: Lufthansa Group ranked 16th on Air Cargo Next ’s Freight 50 list of the top cargo carriers, flying 5.2 billion CTKs in 2022. NOTEWORTHY: Moody’s Investor Relations raised Lufthansa Group’s rating to investment grade with a stable outlook on Jan. 18. Moody’s assigned a long-term issuer rating of Baa3 to the company, meaning Lufthansa Group is rated investment grade by all leading rating agencies, according to the earnings report. “Our upgrade follows the positive trend of Lufthansa’s operating profitability, which improved markedly during 2023,” Moody’s Vice President and Senior Analyst Dirk Goedde said in the Jan. 18 action. “Moody’s expects Lufthansa’s profits and operating cash flow will continue to strengthen in the next 12 months on the back of strong [passenger] demand and tight cost control.” Additionally, Lufthansa Cargo became one of the first carriers to migrate to IATA One Record . One Record is a standard for data sharing that creates a single record view of a shipment. “Since March 2024, companies involved in the airfreight transportation chain have been able to exchange shipment details with each other through ONE Record and benefit from digital shipment tracking,” the earnings report stated. MARKET REACTION: Shares of Lufthansa Group ( OTCMKTS: DLAKY ) were down 0.82% from market open to $7.23 as of market close today. The company has a market capitalization of $8.6 billion. Editor’s note: All amounts have been converted to U.S. dollars.

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