lufthansa

Lufthansa Reports Great Performance in 2024 Q3 With Some Persisting Issues

Performance data from the first half of 2024 wasn’t exactly what the Lufthansa hoped or expected to achieve. The European aviation giant’s performance was below what many analysts expected and what the airline itself expected. Only a few months ago the airline, in fact, lowered its end of year forecast in terms of revenue and profits. The 2024 Q3 report helps sweeten this year’s pill though.

All Lufthansa Group Airlines Generating Profits in 2024 Q3

Let’s kick things off with the good news that comes out of the Lufthansa Group quarterly report. Revenue generated in this quarter alone, which is the busiest of the year for the group’s airlines and divisions, were north of 10 billion Euro. To be exact the total revenue was 10.7 billion euro, up from 10.2 achieved in the same time frame last year.

Passenger figures have also significantly improved for all group airlines. Overall the group (comprised of Lufthansa, SWISS, Austrian Airlines, Brussels Airlines and Eurowings) welcomed aboard 40.3 million passengers in the quarter ending in September 2024. That translates to a 5.9% increase year-on-year. Looking at the passenger figures for the entirety of 2024 so far, the group has carried 100.6 million passengers with a 7.9% increase over the first 3 quarters of 2023. With these figures the group is inching closer to filling the gap with pre-crisis levels. It is interesting to remark though that the biggest chunk of passengers missing is due to the main brand Lufthansa itself. But we’ll talk a bit more in detail about that further down.

There is a bit but regarding this data though. Although it is true that revenue is up this year, it is also true that margins have fallen from their 2023 levels. Overall costs have risen shrinking the operating margin from 14.3% in Q3 2023 to 12.5% in 2024. Profits therefore also shrunk from 1.192 billion euro to 1.095 in 2024.

The Group’s Aircraft Delivery and Frankfurt Issues

As mentioned above the main airline of the group, Lufthansa, is the one having the hardest time to get back up to pre-2020 levels. Both in terms of passenger figures, revenue, and profits. The biggest issues the airline is facing are:

  • Aircraft delivery delays.
  • Inefficiencies in its key Frankfurt hub.

The aircraft delivery issue unfortunately is something that has been plaguing for years already the entire industry. It isn’t something that only Lufthansa has to face. So, although it is true that not having new aircraft is an issue for the German carrier, slowing its growth, it is also the case for every other carrier out there. It might just mean that other airlines were more capable in planning into this very uncertain future.

As for the airline’s Frankfurt issue, that is a Lufthansa exclusive problem. Frankfurt is the single most important airport for the German carrier. It is its primary hub and busiest airport. The fact that it isn’t running at peak efficiency translates to millions if not billions lost throughout the year for LH. I transited on an intercontinental flight through Munich and I must say that compared with other carriers the experience was much clunkier. Anyhow, back to the data, just looking at the passengers figures it is crystal clear how FRA is having huge issues. The airport is still down 21% from its 2019 levels. Just to give that some context, Munich, the airline’s other hub, is only down 8.9% from 2019.

To correct these issues the airline has outlined a plan called Turnaround (very creative). With which the airline hopes to address and correct all issues by 2026 and bridge the gap with 2019 performance levels.

Good Performance Also From Lufthansa Technik and Cargo

Q3 2024 also saw two other divisions of the Lufthansa Group performe well. Both LH Cargo and Technik achieved record earnings and profits reaching highest levels ever.

Lufthansa Technik is the group’s MRO division which takes care of repairs, maintenance and overhauls for its airlines and for other carrier’s that don’t have their own facilities.

The Remainder of 2024’s Outlook

The projection the airline has for its earnings by the end of 2024 remains the same from the last quarter. Q4 should also offer good performance thanks to strong travel demand which continues to be so particularly for premium travel classes (Business and First Class). Possibly the demand is also driven by curiosity for the new Allegris cabins. The forecast is to close the year with 91% 2019 capacity levels.