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July/August 2017
For Business, Corporate Travel & Meeting Buyers & Arrangers

Lufthansa eyes cost cuts after attacks hit long-haul bookings

The Lufthansa Group has warned of a cut in capacity to its winter schedule after bookings on long-haul routes fell “significantly”.

Publishing its first half-year results the group, which owns including Swiss and Austrian, said it would focus on reducing costs after recent terrorist attacks across Europe deterred travellers.

The company saw traffic revenue drop 4.5 per cent year-on-year, despite higher passenger volumes. However, earnings before interest and tax – a key indicator of economic success – increased 61 million Euros to 529 million Euros.

Total group revenue for the first half was €15 billion Euros, a 2.1 per cent decline on the previous year.

“The Lufthansa Group achieved a solid result for the first half-year,” says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. “We are making good progress in implementing our Three-Pillar-Strategy. We see progress in all the areas where we can influence the changes ourselves.

“At the same time, our industry has to prepare for a difficult second half-year”, he added. “The terrorist attacks in Europe and also the increasing political and economic uncertainties are having a tangible impact on passenger volumes.

“The forward bookings, in particular for our long-haul services to Europe have declined significantly. We expect the high pricing pressure to continue.

“In view of this, and as we recently announced, we expect to report an Adjusted EBIT for the full year which is below the previous year’s. This is why we will push on our efficiency increases even more consistently.”

The group said routes to Europe from South America and Asia showed a “particularly weak performance”.

“European and North American business developed relatively stable; Europe even saw an increase in its yields excluding currency effects in the second quarter,” Lufthansa said. 

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