Lufthansa trims back loss
05 / 05 / 2011
LUFTHANSA has seen a trimmer first quarter loss, as demand for freight and passenger movements remain buoyant.
The Lufthansa Cargo unit almost doubled profit from a year earlier to €64 million (US$95.3 million), and a 5.1 per cent increase in average fares helped earnings at the passenger divisions. The group operating loss shrank to €227 million ($330 million) from €330 million ($480 million).
Analysts had predicted a €247 million ($359 million) operating loss, based on the average of nine estimates. The net loss widened to €507 million ($737 million) from €298 million ($433 million) after a €292 million ($424 million) reduction in the book value of hedging options mainly related to fuel purchases.
“This adjustment really doesn’t reflect the economic reality,” chief financial officer Stephan Gemkow said. “It’s purely an accounting effect, while in actuality these hedging options are taking a lot of pressure off our operating result.”
Lufthansa has seen restricted traffic gains as unrest in the Middle East and north Africa curbed demand on routes served by Austrian Airlines and British Midland units. Lufthansa also modified its Japanese schedule following the 11 March earthquake and tsunami.
A German government tax on air travel, which went into effect at the beginning of the year, also damaged profit.