Thursday, 27 April 2017

Lufthansa Positive Despite Loss, Says Not Interested In Alitalia

German airline group Lufthansa Thursday reported a much larger net loss in the first three months of the year, but sought to play up a return to positive operating results.

The group reported a net loss of 68 million euros ($74 million) between January and March, compared with an 8-million-euro loss in the same period last year.

Adjusted operating, or underlying profit stood at 25 million euros, a marked improvement on a 53-million-euro loss in the first quarter of 2016, on the back of revenues up 11.2 percent at 7.7 billion euros.

"For a period that is traditionally difficult for the airline industry, we have posted our first positive earnings result since 2008," chief financial officer Ulrik Svensson said in a statement.

Svensson pointed to increased demand at the Lufthansa Cargo division and maintenance unit Lufthansa Technik as the biggest contributors to the improvement.

It was also the first time the group's financial reporting included Brussels Airlines, which it bought at the end of 2016.

Looking ahead, the group left untouched its forecast for the full year of "substantially higher revenues" than 2016's 31.7 billion euros and "slightly lower" adjusted operating profit than the 1.75 billion euros brought in last year.

German airline group Lufthansa said on day it is not interested in snapping up troubled Italian carrier Alitalia, as Rome hunts for a buyer after workers rejected a bailout plan. “We are clearly not there to buy Alitalia,” finance chief Ulrik Svensson said during a teleconference with analysts on Lufthansa’s first-quarter financial results.

Italian government ministers said Wednesday they would not oppose a takeover bid by the German behemoth, as they announced that Alitalia would be sold “to the highest bidder”.

Lufthansa, which already owns a stable of carriers including Austrian Airlines, Swiss, Brussels Airlines, and Eurowings, on Thursday reported a net loss of 68 million euros between January and March — a worse performance than the same period last year.

The result comes after a record year for Frankfurt-based Lufthansa, in which it booked profits of 1.75 billion euros (USD 1.90 billion) despite fierce competition from low-cost competitors and Gulf airlines such as Etihad.

Loss-making Alitalia’s future is up in the air after its workforce rejected a restructuring plan which management had presented as the only alternative to bankruptcy.

Etihad, which owns a 49 percent stake in Alitalia, and other shareholders had made staff acceptance of the plan a precondition for their participation in a two-billion-euro recapitalisation plan involving a combination of loans and new shareholder financing.

But despite earlier proposals being watered down in negotiations with unions, over two thirds of staff voted to reject them in a ballot on Monday, in which more than 90 percent of employees took part.

The company’s board on Tuesday asked the government to appoint administrators to find a purchaser or organise the winding up of the company.

Etihad also holds a stake in struggling German airline Air Berlin, which has delayed the release of its 2016 annual results — widely expected to show the firm in a poor light –until Friday.

Lufthansa has been mooted as a potential buyer for Air Berlin in the German press if the Gulf carrier decides to review its strategy in Europe.