Lufthansa(US:DLAKY)2022-08-07 00:46Financial Data and Key Metrics Changes - The company reported an adjusted EBIT of €393 million and a net income of €259 million for Q2 2022, marking a significant recovery from previous losses [14][25] - Free cash flow exceeded €2.1 billion in Q2, driven by strong bookings and effective working capital management [14][18] - Net debt decreased to €6.4 billion, down €2.6 billion from year-end 2021, while equity increased to €7.9 billion, reflecting a strong financial position [20][21] Business Line Data and Key Metrics Changes - Lufthansa Cargo achieved an adjusted EBIT of €482 million in Q2, nearly 50% higher than the previous year's record results, continuing a trend of strong performance [6][17] - Passenger Airlines transported 29 million passengers in Q2, reaching over 70% of pre-crisis levels, with a seat load factor of 80%, just 3 percentage points below 2019 levels [8][15] - Yields for Passenger Airlines increased by 24% compared to 2021, with the Transatlantic market showing a 10% increase over 2019 levels [15][48] Market Data and Key Metrics Changes - The air cargo market remains constrained, with demand exceeding pre-crisis levels due to ongoing supply chain disruptions [17][29] - Corporate travel bookings recovered to around 50% to 60% of pre-crisis levels by the end of Q2, with expectations to reach 70% by year-end [42][46] Company Strategy and Development Direction - The company aims to maintain a multi-hub, multi-brand strategy to remain competitive and grow its leisure and touristic business [23][30] - Plans for product and service upgrades are underway, including new seating and services across all travel classes, to enhance premium positioning [30][31] - The company is committed to sustainability, targeting a 50% reduction in carbon emissions by 2030 compared to 2019 levels, with initiatives for sustainable aviation fuel [34][35] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the recovery of the aviation industry, despite ongoing operational challenges and macroeconomic uncertainties [4][36] - The company expects adjusted EBIT for Q3 to be substantially higher than Q2, with full-year adjusted EBIT projected to exceed €500 million [25][36] - Operational difficulties are acknowledged, but the management believes that the current demand environment will support continued profitability [36][37] Other Important Information - The company is in negotiations with unions regarding employee compensation, with significant progress reported in talks with ground staff unions [11][12] - The planned divestments of AirPlus and non-European catering businesses remain a focus, with strong investor interest noted [26] Q&A Session Summary Question: Confidence in reaching agreements with pilots and ground staff - Management expressed optimism about reaching agreements with ground staff soon, while negotiations with pilots are ongoing, focusing on competitive salaries and career growth opportunities [40][41] Question: Update on corporate business bookings recovery - Corporate travel bookings have increased to around 50% to 60% of pre-crisis levels, with expectations to reach 70% by year-end [42][46] Question: Sustainability of premium leisure demand - Management noted that a growing segment of the population is less sensitive to economic downturns and continues to spend on premium travel experiences [40] Question: Cargo performance expectations for H2 - The company expects cargo results for H2 to at least match last year's performance, with yields slightly decreasing but remaining above pre-crisis levels [52] Question: Catering disruptions and their resolution - Catering disruptions were attributed to industry-wide staffing shortages, but improvements have been made, and the situation is expected to stabilize [53] Question: Eurowings' operating results - Eurowings faced significant irregularity costs impacting its EBIT, but a turnaround is expected in the second half of the year [54]