Andrew Doyle/FRANKFURT
Lufthansa has revealed that Asian passenger traffic is expected to recover fully by the end of this year, but warns that over-capacity on transatlantic routes is still hurting yields.
Despite unveiling record DM2.5 billion ($1.26 billion) pre-tax profits for last year - up 42% on 1997 - the group says a "subdued" global outlook has forced it to peg back this year's target result to DM2 billion. Net profit on group turnover of DM22.65 billion was DM1.43 billion.
Lufthansa Group chief financial officer, Karl-Ludwig Kley, says Asian markets should shrug off the effects of the downturn by the end of this year. Asian yields, however, are set to continue their fall, in line with global trends, with the situation even more serious on the North Atlantic.
In a thinly veiled attack on airlines such as British Airways, which is pledged to slow capacity growth on saturated North American routes, Kley says: "Competition has sharpened where some rival carriers - in crass contradiction to their solemn announcements - are obviously continuing their expansionist policy undiminished."
Lufthansa, too, increased capacity in this market, but says it started from a lower base and is aiming to alleviate unsustainably high load factors. Kley also hints that a further round of fare cuts may be in the pipeline.
Lufthansa is attempting to insulate itself from cyclical downturns in passenger traffic, broadening its activities across several sectors. Last year, all seven of the group's business segments were profitable, although Technik and Cargo both saw earnings fall.
Recent heavy use of Frankfurt Main Airport by NATO tankers has affected Lufthansa operations, although the carrier denies reports of DM10 million losses a day as a result.
Source: Flight International
