Lufthansa eyes higher profits in 2015 | Business| Economy and finance news from a German perspective | DW | 12.03.2015
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Lufthansa eyes higher profits in 2015

Germany's biggest airline, Lufthansa, is expecting a 'tangible' improvement in its profits this year after reporting meager 2014 earnings due to strike costs and stiff competition from rival airlines.

German airline Lufthansa on Thursday reported a net profit of 55 million euros ($58 million) in 2014, down from 313 million euros a year earlier.

While revenues were unchanged at 30 billion euros, Germany's biggest airline logged an operating profit that was 37 percent higher at 954 million euros.

Lufthansa Chief Executive Carsten Spohr said in a statement the 2014 result would confirm that sticking to "uneconomical structures" wasn't an option for the airlines future.

"On the one hand, all the business segments are profitable and ... we achieved our projection in a far-from-easy year. At the same time, though, with our high investments in modern aircraft and premium services, we simply have to further increase our operating profit. For this we need competitive structures," Spohr added.

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Strike costs and competition deal blow

The German airline is currently facing tough competition from Gulf carriers in its premium market and long-distance flights' segments. Moreover, its budget airline Germanwings saw operating profit dwindle in 2014 despite lower fuel cost.

Also weighing on the 2014 earnings were strike costs totaling 232 million euros as pilots walked out in November and December in protest against the airline's drive to cut costs.

Lufthansa management announced that it wouldn't pay a dividend for 2014, but at the same time expressed the hope for better earnings in 2015.

"Lufthansa expects to post a tangible improvement in its operating result, though this will continue to be saddled by fleet re-equipment project costs," the airline said.

The carrier said this year's projected earnings before interest and tax (EBIT) amounted to "over 1.5 billion euros." It said it also expected a "substantial improvement on the 2014 group operating result."

uhe/pd (Reuters, dpa, AFP)

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