Lufthansa Group’s Logistics revenue rises 12.2%

Lufthansa Group today reported 10 billion euros ($10.8 billion) in operating revenue for the second quarter of 2024, an increase of 6.6% from the same period last year. [caption id="attachment_57136742" align="alignright" width="300"] (Courtesy/Lufthansa Cargo)[/caption] Revenue in the Logistics segment, which includes Lufthansa Cargo , rose 12.2% year over year to $863.3 million, according to today’s earnings report. THE BIG PICTURE: Lufthansa Group’s improved Logistics revenue indicates growth in the air cargo sector, which was hampered in 2023 by high capacity and low demand. The carrier group’s Logistics revenue had fallen 16% YoY in Q1 2024 and 36% YoY for full-year 2023. Throughout 2023, analysts were optimistic that the market would normalize in 2024. Lufthansa Group’s Logistics segment comprises: Lufthansa Cargo ; Jettainer ; time:matters Group Heyworld ; CB Customs Broker ; and A 50% stake in AeroLogic . BY THE NUMBERS: Lufthansa Group reported an adjusted EBIT of $741.2 million, down 36.8% YoY. The carrier group also reported in Q2: Net profit of $506.7 million, down 46.8% YoY; Earnings per share of 42 cents, down 47.3% YoY; 4.5 billion available cargo tonne kilometers (CTK), up 16.5% YoY; 2.5 billion revenue CTKs, up 17.4% YoY; and Cargo load factor of 56.8%, up 0.4 percentage points YoY. WHAT THEY’RE SAYING: Air cargo capacity was up 10% YoY for the first half of 2024, primarily due to expanding passenger business and the associated increase in bellyspace, according to the earnings report. “The high demand for e-commerce shipments and capacity bottlenecks in maritime traffic led to an increase in demand at Lufthansa Cargo and thus to a higher cargo load factor,” the report stated. “Lufthansa Cargo ... expects a good second half-year.” Lufthansa Group Chief Executive Carsten Spohr said in the release, “It is particularly pleasing that in the current challenging environment all the other passenger airlines in the group, as well as Lufthansa Cargo, remain on course in line with market developments.” STATE OF PLAY: As in its Q1 earnings statement, Lufthansa Group said union negotiations and strikes took a toll in H1. The group said labor actions affected earnings by more than $108 million. “Despite continued capacity growth, the financial position of the Lufthansa Group deteriorated significantly in the first half of 2024, with a number of strikes by different employee groups of the Lufthansa Group and by employees at system partners in the first quarter of 2024 having a particularly negative impact,” the report stated. Lufthansa Group reached a long-term wage agreement with the Employers’ Federation for Air Transport Companies union and the cabin staff union Unabhangige Flugbegleiter Organisation (UFO) on April 11. UFO had called for two days of strikes. On April 25, Lufthansa Group subsidiary Austrian Airlines , the trade union vida and the works council for cabin staff reached an agreement for about 2,400 flight attendants and 1,000 pilots. The collective agreement runs until December 2026 and includes a ban on strikes. 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: Lufthansa Group will welcome Till Streichert as chief financial officer on Sept. 15. He will replace Michael Niggemann , who has been temporary CFO since the departure of Remco Steenbergen on May 7. Streichert is currently CFO of the Amadeus IT Group in Madrid. FUTURE LOOK: Lufthansa Group cut its adjusted EBIT outlook on July 12 to between $1.5 billion and $1.9 billion, down from the previous guidance of $2.4 billion. “We expect to report a clearly positive annual result for the Lufthansa Group,” Niggemann said in the report. “Excluding the strike effects, we are convinced that we will achieve stable unit cost development for the year as a whole.” MARKET REACTION: Shares of Lufthansa Group ( OTCMKTS: DLAKY ) were down 2.17% from market open to $6.30 as of market close today. Lufthansa Group has a market capitalization of $7.5 billion. Editor’s note: All amounts have been converted to U.S. dollars.

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