Lufthansa plans to operate over 700 aircraft in 2023, but predicts that supply chain issues and late deliveries of new aircraft will drive industry-wide capacity shortages for years to come.
“Overcapacity issues, which our industry has seen before the pandemic, won’t be over any time soon,” Lufthansa Group CEO Carsten Spohr said during the company’s third quarter (Q3) financial earnings call Oct. 27.
For the full year, Lufthansa Group expects actual capacity across its passenger airlines was 75% of 2019 levels on average. “We had more then 600 aircraft in operation in a super strong summer,” Spohr said.
“Lufthansa reached $1 billion in EBIT. “In all modesty, we have left the crisis mode behind us,” Spohr said. “However, Bottlenecks will limit reconstruction of our industry.”
The head of Europe’s largest airline group said there are several factors which will limit capacity worldwide, while placing upward pressure on ticket prices.
Besides late deliveries of new aircraft, supply chain issues also affect maintenance. “We have significantly fewer aircraft in operation than we would like to have. For example, there are no Boeing 787 cockpit windows available worldwide, which keeps several aircraft on ground,” Spohr said.
Lufthansa Group expects to take delivery of around 200 aircraft before 2030, 80 of which are earmarked for Lufthansa German Airlines, the core brand.
Spohr said labor shortages are serving as a constraint on capacity as well. “In the U.S., there is a shortage of 15.000 pilots...However, this shortage results in high load factors and healthy fares.”
Lufthansa revenues for the traditionally high-traffic Q3 of 2022 rose 93% year-on-year to €10.1 billion ($10.1 billion). Net income increased significantly in the third quarter to €809 million, compared to a loss of €72 million a year earlier.
Spohr said the strong results have been achieved without closed markets like Asia. “Now Japan is coming along, and in part, perhaps to a limited extent, China too in the future.”
He said the international orientation of the Group allows greater flexibility. “Three of four Lufthansa tickets will be sold outside of Germany. We never had this before.” Transatlantic sales have helped drive that growth. Revenues in the U.S. increased by 15% in the most recent quarter despite operating 20% less capacity.
Subsidiaries Outperforming
“Lufthansa Technik benefits from strong global demand for aircraft maintenance,” Spohr said. The volume of business was already back at around 90% of the pre-crisis level in the latest quarter, fueling an Adjusted EBIT of €177 million in Q3 , the best quarterly result ever for the company.
In the first nine months, Lufthansa Cargo has already achieved an operating profit of €1.3 billion (€943 million a year earlier) and is on course for a full-year result even above last year’s record €1.5 billion euros.
Austrian Airlines returned to profitability in Q3 and achieved an adjusted EBIT of €110 million. The fleet will grow with four Airbus A320neos to a total of 64 aircraft by spring 2023.
Brussels Airlines posts Adjusted EBIT of €51 million. its Its revenue also increased during Q3, amounting to €436 million. The Belgian airline will expand its fleet in 2023 with four medium-haul aircraft, to a total of 36 medium-haul and nine long-haul aircraft.
With favorable market conditions in the summer months and efficiency gains through its restructuring activities, Swiss International Airlines (SWISS) reported Q3 operating profit of SFR 221 million, compared to SFR 23 million a year earlier.
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