Financial Data and Key Metrics Changes - The Lufthansa Group achieved an adjusted EBIT of €1.1 billion for Q2 2023, marking the highest second quarter results in the company's history [5][27] - Group revenue totaled €9.4 billion, with net income reaching €881 million, supported by lower financial expenses [5][27] - Operating cash flow was €3.1 billion, driven by strong operating results and good working capital management [38] Business Line Data and Key Metrics Changes - All passenger airlines within the group reported profitability, with adjusted EBIT for passenger airlines amounting to €965 million [28] - SWISS recorded an operating margin of almost 18%, while Lufthansa Airlines and Austrian Airlines generated double-digit margins [28] - Lufthansa Technik generated a record second quarter adjusted EBIT of €156 million, benefiting from increased maintenance needs across the global airline industry [34] Market Data and Key Metrics Changes - The group welcomed 33 million passengers, with yields up 13% from the previous year and 25% higher than in 2019 [5][29] - Seat load factors increased to over 83%, aligning with pre-crisis levels, resulting in unit revenues 25% above 2019 [30] - Business travel has recovered to more than 70% on transatlantic routes, with overall demand remaining strong [18] Company Strategy and Development Direction - The company is transitioning from an aviation group to an airline group, focusing on core airline business and reducing organizational complexity through divestments [6][9] - Recent M&A activities include the sale of LSG Group and AirPlus, as well as acquiring a 41% stake in ITA Airways [7][9] - The company aims to enhance its international presence, with only about 30% of turnover coming from Germany [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for travel, with current bookings for Q3 and the rest of the year exceeding 90% of pre-crisis levels [17] - The company anticipates a significant efficiency increase starting in 2024, with plans to introduce 15 additional long-haul aircraft [14] - Management highlighted ongoing challenges such as supply chain issues and staff shortages but remains optimistic about future performance [15][25] Other Important Information - The company is investing €2.5 billion in product and service quality improvements by 2025, alongside a fleet modernization program [19][21] - Sustainability initiatives include offering green fares that offset individual flight-related CO2 emissions, with nearly 300,000 guests opting for them since February 2023 [22] - The company expects adjusted EBIT for 2023 to be at least €2.6 billion, with a strong outlook for the third quarter [46][49] Q&A Session Summary Question: Update on M&A and Lufthansa Technik - Management indicated no new updates on Lufthansa Technik, emphasizing the sufficiency of recent transactions [56][58] Question: Concerns about EU ETS expansion - Management expressed concerns about the financial impact of potentially extending ETS to long-haul flights but believes regulators understand the negative implications for European competitiveness [57][60] Question: Pilot wage increases and cost implications - Management provided details on pilot salary increases, estimating an additional €77 million in costs for 2024 due to the new agreement [63][65] Question: Engine issues and fleet management - Management discussed the need to ground certain engines for maintenance, with sufficient backup available to manage operations [68][70] Question: EU ruling on state aid and airport fees - Management is appealing the EU ruling on state aid for legal clarity, noting that airport fees in Frankfurt are expected to increase in the high single digits [74][76] Question: Unit cost guidance for 2024 - Management expressed confidence in declining unit costs for 2024, driven by increased capacity and improved productivity [78][81] Question: Tariffs and passenger yield sustainability - Management indicated strong yields, particularly in intercontinental travel, and expects this trend to continue into 2024 [86][87]
Lufthansa(DLAKY) - 2023 Q2 - Earnings Call Transcript