Lufthansa(US:DLAKY)2024-04-30 20:04Financial Data and Key Metrics Changes - The Lufthansa Group reported revenues of €7.4 billion, a 5% increase year-over-year, despite a higher-than-expected quarterly loss of €849 million primarily due to strike effects [9][24] - Adjusted free cash flow was positive at €3 million, although lower than the previous year [9] - The adjusted EBIT loss for the first quarter was €849 million, significantly impacted by strikes and subdued cargo results [24][25] - Net debt decreased, and available liquidity increased to €10.8 billion, supported by a new revolving credit facility [31][32] Business Line Data and Key Metrics Changes - The passenger airlines segment experienced an operating loss of €918 million, up from €512 million the previous year, with strikes accounting for approximately €300 million of the increase [26] - Cargo division profits were down due to tough comparisons from the previous year, but would have achieved breakeven without strike impacts [29] - Lufthansa Technik showed resilient performance with a 4% increase in results, excluding strike impacts, with adjusted EBIT at €260 million [30] Market Data and Key Metrics Changes - The demand for air travel remained strong, with 24 million guests welcomed on board, a 12% increase from the previous year [9] - Bookings for the summer period were up 16% compared to the previous record year, indicating strong demand [18] - The recovery in Asia Pacific is slower, particularly in China, while India and Japan are performing better [19][60] Company Strategy and Development Direction - The company is focused on enhancing customer experience through investments in fleet modernization and the launch of new products like the Allegris cabin [11][12] - Lufthansa City Airlines is set to strengthen the short-haul network and support long-haul growth [15] - The company aims to transform into a global airline group with a multi-hub, multi-airline, multi-brand business model [22] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging operating environment due to geopolitical instability, rising costs, and supply chain bottlenecks [6][8] - Despite a difficult quarter, management expressed optimism for the rest of the year, citing strong summer bookings and strategic investments [11][18] - The company expects adjusted EBIT to be around €2.2 billion for 2024, with adjusted free cash flow projected to be at least €1 billion [38] Other Important Information - The company proposed a dividend payment of €0.30 per share, indicating financial health and commitment to shareholder value [32] - The company is not considering share buybacks at this time, prioritizing fleet renewal investments instead [60] Q&A Session Summary Question: Regarding Pratt & Whitney compensation and its booking - Management stated that no agreement has been reached yet, and compensation will be recorded as costs are incurred over the coming years [40] Question: Update on ITA and remedies - Management expressed optimism about the ITA deal, emphasizing the need for direct access to global markets and constructive discussions with the EU Commission [41][42] Question: Interplay between new aircraft and capacity growth - Management confirmed that the reduction in capacity from 94% to 92% reflects delays in aircraft deliveries, but does not significantly impact overall capacity plans [46] Question: Update on corporate travel recovery - Corporate travel is expected to reach around 70% of pre-pandemic levels by the end of the year, with Q1 at approximately 65% [50] Question: CASK assumptions and productivity compensation - Management indicated that CASK guidance includes productivity arrangements, with expected increases in staff costs due to recent wage agreements [73] Question: MRO business and supply chain challenges - Management noted that while MRO margins are expected to remain flat, the overall performance is strong, and the supply chain challenges are creating both positive and negative impacts [55][67]