Restructured Eurowings Leads Profits Recovery for Lufthansa Passenger Units | New
Lufthansa Group CEO Carsten Spohr believes the Covid crisis has accelerated the takeover of Eurowings, the low-cost unit which now expects it to continue to make a profit after reaching this milestone in the third trimester.
Eurowings recorded adjusted EBIT of 108 million euros ($ 125 million) for the quarter ended September 30, making it the group’s premier passenger airline in a quarter in which freight was the main driver of the return to profitability of the Lufthansa group. at an operational level.
Eurowings‘ positive EBIT performance marks a turnaround from the loss of 108 million euros recorded in the same quarter last year, and the loss of 251 million euros in the first half of this year, when its flight capacity has been sharply reduced due to Covid travel restrictions.
But as restrictions began to ease and demand for pleasure travel and VFR travel in particular increased, Eurowings stepped up its operations.
Eurowings capacity increased from 10% and 25% of pre-crisis levels in the first and second quarters to 62% in the third quarter.
The Eurowings segment also includes the Turkish leisure joint venture SunExpress. Speaking on a third quarter earnings conference call today, Lufthansa Chief Financial Officer Remco Steenbergen said that while Sun Express made a share of the profits in the third quarter, Eurowings was profitable on its own.
“SunExpress’s profit is just over half of the 108 million euros, so Eurowings alone made a solid profit and we expect this to continue,” he said.
The Eurowings segment has recorded an operating loss in four of the past five years and restructuring efforts were underway long before the Covid crisis hit.
Lufthansa attributes the improvement of Eurowings to the simplification efforts in which it combined its activities in Germany into a single transaction, harmonized its fleet and reduced its overheads by 30%.
Spohr said: “They [Eurowings] have turned around this summer and are making money. And we watch them make money for the whole year next year. They are therefore our tool to defend our market, but at the same time, they create profitability and value. This is what we always wanted them to do. It took a while – I can be honest about this – but now we are there. And in fact, Covid has accelerated this success story. “
Notably, in parallel with its German operations, the airline has recently expanded outside of its domestic market by opening bases in Stockholm and Prague; services in the Czech capital started yesterday.
Eurowings’ profit in the third quarter contrasts sharply with a loss of 450 million euros for its network operator operations over the same period. This, however, was less than half of the loss of 1.2 billion euros recorded in the same quarter last year, and partly slowed the losses in this part of the business for 2021. The losses over the years first nine months for the network operator’s operations amounted to 2.9 billion euros.
|Division||Jan-Sep 2021||Jan-Sep 2020|
|Lufthansa Q3 Report|
|Lufthansa||-2 165 M €||-2,635 M €|
|Swiss||– € 393m||– € 445m|
|Austrian||– € 142m||– € 233m|
|Brussels Airlines||– € 199m||– € 341m|
|Eurowings||– € 144m||– € 466m|
|Lufthansa Cargo||941 million euros||427 million euros|
|Group total||-2,078 M €||– € 4,161m|