Financial Data and Key Metrics Changes - The company reported revenues exceeding €10 billion in Q2 2024, marking a 7% increase compared to the previous year, driven by an 11% increase in capacity [18] - Operating expenses rose by 10% due to higher production levels and general cost inflation, resulting in an operating result of €686 million, a decrease of €400 million year-on-year [18] - Adjusted EBIT for the first half of the year is expected to be between €1.4 billion and €1.8 billion, down from previous guidance of €2.2 billion [36] Business Line Data and Key Metrics Changes - The Passenger Airlines segment's operating results fell to €581 million from €965 million last year, primarily due to a 5.3% decrease in unit revenue [22] - Lufthansa Airlines specifically saw a significant decline in adjusted EBIT, achieving less than half of its previous year's performance [24] - Lufthansa Technik reported a 15% revenue increase in Q1 followed by another 16% in Q2, achieving record results [33] Market Data and Key Metrics Changes - The overall capacity growth in the market was 12% in Q2, while the company's capacity grew by 11%, indicating strong demand for air travel [20] - Yields in Asia dropped nearly 10% due to high capacity growth from Chinese carriers, while North America saw a more stable yield decline of 2.6% [21] - The leisure travel segment has recovered faster than corporate travel, with corporate travel expected to lag behind pre-crisis levels for several years [21] Company Strategy and Development Direction - The company is focusing on modernization rather than restructuring, with a turnaround program aimed at improving efficiency and profitability [48] - Strategic milestones include the launch of Lufthansa City Airlines to enhance cost efficiency and the acquisition of ITA to expand market presence [14][15] - The company aims for an 8% EBIT margin in the long term, with a focus on premium services and operational improvements [65] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the first half of the year did not meet expectations due to strikes and operational challenges, but expressed optimism about future demand, especially in premium cabins [5][43] - The company expects a positive result for the year driven by sustained demand and strong performance in Lufthansa Technik [43] - Future capacity planning will be adjusted to support yield development, with a focus on maintaining unit costs [60][38] Other Important Information - The company has implemented a liability-driven investment strategy to manage pension obligations and net debt, which has slightly decreased [35] - Free cash flow generation was better than operating results suggested, supported by robust summer season bookings [34] Q&A Session Summary Question: Financial targets associated with the transformation plan - The company aims for an 8% margin as a long-term target, which is essential for future viability [45] Question: Costs of restructuring and plans for AirPlus proceeds - The company clarified that it is focusing on modernization rather than restructuring, with plans to invest proceeds from AirPlus into core business areas [47][52] Question: Capacity ramp-up and profitability outlook - Management indicated that while capacity growth may not reach 100% of 2019 levels, yield is prioritized over growth to enhance profitability [60] Question: Regional performance and unit cost development - The company noted that the Middle East market is facing challenges, while unit costs are expected to remain flat despite inflationary pressures [70]
Lufthansa(DLAKY) - 2024 Q2 - Earnings Call Transcript