German leisure carrier Eurowings turned round a protracted period of losses to post record profits in 2023, though Lufthansa Group chief executive Carsten Spohr still sees work needed to further improve its profitability.
Eurowings has struggled for profitability over many years, but restructuring efforts helped the carrier to post an adjusted EBIT of €205 million ($224 million) last year. That marks a notable turnaround after several years of losses, pre-dating the the pandemic, including an operating loss of €197 million in 2022.
The profit was achieved on a 40% jump in revenues to €2.4 billion, in carrying 21 million passengers in 2023, delivering an operating margin of almost 8% – the second highest within the group.
Speaking during Lufthansa’s full-year results conference call on 7 March, Spohr – while ”quite happy that Eurowings is now finally profitable” – acknowledged this year’s result includes “a significant one-time effect” relating to its Turkish joint venture SunExpress.
“Eurowings is on the right track. We have turned around the company,” he says. “But the particular number we are showing… is not reflecting the profit level of that business yet. We need to work on that.”
Eurowings chief financial officer Kai Duve adds: ”We can see that our reorganization as a value airline for Europe is succeeding. As a result, we have developed from an airline with a strong domestic German focus into a leading European leisure airline.”
Indeed, the carrier has just announced plans to begin flights this winter to Saudi city Jeddah from both Berlin and Cologne, adding to its launch last year of Dubai services.
”The German domestic business that was very interesting for Eurowings for many years is not that strong any more, it is declining,” explains Spohr. ”So that is why we are moving aircraft to what we call warm water destinations – including very warm water, like Riyadh and Dubai.”
Eurowings focuses on serving leisure destinations from its home bases together with a small number of international bases in Europe, of which Palma de Mallorca is the biggest. “We have 60 flights in and out everyday [out of Palma], ” he says. ”Stockholm had a good start, we see some opportunities there. Prague is interesting for us, [it has] good labour cost.
”We will not turn into a second Ryanair, that is not our point,” Spohr adds. ”But Eurowings will extend its defence for our important German catchments – which are not only defensive, because we make a lot of money and that is key to Eurowings.
”And where we see opportunities to create value, you’ll see it continue to expand.”
