Lufthansa achieves record full-year profit

Lufthansa posted a 70% improvement in adjusted full-year EBIT to reach Ђ2.97 billion (USD 3.68 billion) for 2017 after revenues were lifted by its acquisition of Air Berlin as well as gains from new pilot labour deals..

It achieved the record profit on a 12% rise in revenues to Ђ35.6 billion, during a year in which it expanded the scope of its operations with variousAir Berlin assets.

The improved profit performance was helped by a positive Ђ582 million one-off effect, recognised in the income statement in December, from its new collective deal with pilot union Vereingung Cockpit covering crews acrossLufthansa, Lufthansa Cargo and its Germanwings unit. The improvement took the carrier's adjusted EBIT margin up from almost three points to 8.4%.

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Group net profit increased a third to Ђ2.36 billion in 2017.

"Our endeavours of the past few years are paying off," says Lufthansa chief executive Carsten Spohr. "Our modernisation has a sustainable impact. We have achieved the best result in the history of our company."

Chief financial officer Ulrk Svensson adds: "We are particularly pleased that we were again able to lower our passenger airlines’ unit costs, excluding fuel and currency factors, last year."

The group cites strong demand and a positive pricing environment for helping its network carriers – Lufthansa, Swiss and Austrian Airlines – increase their combined adjusted EBIT nearly 50% percent to Ђ2.3 billion. The German operation contributed Ђ1.63 billion, Swiss Ђ542 million andAustrian Ђ94 million.

Its expanded point-to-point operations, which included wrapping the formerAir Berlin capacity into Eurowings, moved from a loss of Ђ100 million to an adjusted EBIT of Ђ94 million. Lufthansa says the inorganic growth following the insolvency of Air Berlin will make "positive contribution" for the point-to-point unit from 2019 onwards.

The strong performance for 2017 was achieved against a backdrop of relatively low fuel costs. Lufthansa expects these to climb Ђ700 million in 2018 but, in its first guidance for the year, expects this to be "largely offset" by an improved operating performance, which will help adjusted EBIT to be "only slightly below" last year's levels.

Organic capacity is expected to increase by some 7% as unit revenues, excluding currency factors, remain "broadly stable", it says. Unit costs excluding fuel and currency should be further reduced by 1-2%.