QUOTE AND NEWS
Reuters  May 13  Comment 
German airline Lufthansa said on Monday that April passenger traffic in terms of revenue seat kilometers was flat from a year earlier.
The Hindu Business Line  May 9  Comment 
Move aimed at attracting for foreign tourists
Wall Street Journal  May 7  Comment 
Deutsche Lufthansa's shareholders meeting became a duel between U.S. and German corporate-governance standards amid a dispute over whether the airline's former chief executive should be elected its next chairman.
Financial Times  May 6  Comment 
Dispute highlights a schism between German and foreign shareholders on importance of independent voices among non-executive directors
Wall Street Journal  May 6  Comment 
Former Lufthansa chief executive Wolfgang Mayrhuber has withdrawn his candidacy for chairmanship of the airline's supervisory board, citing "criticism from shareholders," the company said.
Financial Times  May 2  Comment 
German airline group confident of generating more operating profit as it continues pursuing cost-cutting plans and drive to restructure company
Wall Street Journal  May 1  Comment 
Lufthansa reached a wage deal with a union representing ground staff, although the German flag carrier remains in dispute with pilots over pay and work conditions.




 

Deutsche Lufthansa AG (FRA:LHA) is a German airline with five business segments: scheduled passenger air traffic, scheduled airfreight services, maintenance, repair and overhaul (MRO), information technology, and catering.

Lufthansa operates the following airlines: Deutsche Lufthansa AG, Lufthansa CityLine GmbH, Swiss International Airlines AG, Austrian Airlines AG, British Midland Ltd., Air Dolomiti S.p.A., Eurowings Luftverkehrs AG, and Germanwings GmbH.

Business Growth

Lufthansa's operating profit came to €876 million in 2010, more than five times higher than in 2009. Lufthansa's net profit for 2010 was €1.1 billion.[1] Lufthansa's sharp increase in profitability is due to the combination of strong sales in international passenger traffic and cargo and cost-cutting measures.

Trends and Forces

Rising German exports help Lufthansa's logistics business

Lufthansa logistics and cargo segment benefited from the global economic recovery and the recovery of German exports. Lufthansa's logistics business segment reported an increase in revenue of 43% to €2.795 billion in 2010.

German exports surged in March 2011 to the highest monthly value ever recorded.[2] Exports jumped 7.3 percent from February 2011, when they gained 2.8 percent. Exports were worth €98.3 billion ($141.4 billion) in March.[2]

Germany’s economic recovery is broadening as companies boost investment and hiring to meet booming export demand from Asia.[2] The recovering German economies is boosting demand for Lufthansa's cargo services, which allow exporters to ship freight by air.

German air travel tax cuts into Lufthansa's revenues

The German government has levied a €1 billion ($1.3 billion) per year tax on the air travel industry in Germany as part of a package of budget cuts and taxes.[3] The air travel tax is expected to raise airfares by €8-16 per ticket. German airports body ADV has predicted that air traffic in Germany could drop by as much as 3% as passengers seek cheaper tickets in France, Belgium, Poland, and Germany's other neighbors.[3] Lufthansa's CEO has said that the entire tax cannot be passed onto the consumer, which has increased its costs while also reducing its revenues due to the increase in airfares.

Competition

Lufthansa competes with both European airlines that offer many flights throughout continental Europe, such as Air France ADS (AKH), as well as with international airlines outside of Europe offering flights to Germany, such as American Airlines (AMR) and Delta Air Lines Inc. (DAL).

References

  1. Lufthansa Annual Report 2010
  2. 2.0 2.1 2.2 Bloomberg: "German Exports Surged to Record $141.4 Billion in March, Boosting Growth" May 9, 2011
  3. 3.0 3.1 Reuters: "German air travel tax overshadows IATA meeting" June 8, 2010
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