Lufthansa recovered some of its poise in the September quarter with a steady profits performance, but doubts that its full-year results will be able to match the record earnings of 1995.
The group suffered an unexpected tumble in profits during the first half of 1996 as the anticipated traffic growth failed to materialise. It put the brakes on expansion plans, which appear to be showing results, but, even with a profitable fourth quarter, the group result is expected to be down for the full year.
Over the first three quarters the group pre-tax profit now stands at DM434 million ($290 million), down by 14.2% over a year ago. Costs over the nine months are up by 6.7%, largely blamed on an 18%surge in fuel costs and growth in labour costs, which were pushed up by pension and redundancy costs, despite staff reductions. Lufthansa Cargo has also been running up losses.
Lufthansa says that profits should stay steady in the fourth quarter, but warns that the result depends on the outcome of the pay negotiations which are now taking place and which have already led to a "warning" strike at the start of November.
Lufthansa's European partner, SAS, had earlier revealed another weak third quarter, which left the group showing pre-tax profits more than halved, at under SKr1.3 billion ($195 million) over the first nine months. The Scandinavian airline group has promised to make major cost savings, but says that these will not include redundancies.
Source: Flight International
