Lufthansa Group Loses $900 Million In First Quarter

Following a hectic first quarter, with several strikes impacting operations at Lufthansa Group, the company reported a huge Q1 2024 net loss. The group estimated that the industrial actions had an impact of around €350 million ($371.6 million) during the three-month period.

Preliminary estimates

Lufthansa Group said that on a preliminary estimate, its Q1 2024 adjusted earnings before interest and taxes (EBIT) should be -€849 million ($901.6 million), compared to a negative EBIT a year prior of €273 million ($289.9 million).

According to the statement, the loss was higher due to various strikes, which included actions by employees within and outside the group, such as security personnel walking out at Frankfurt Airport (FRA) and Hamburg Airport (HAM) in early March.

Nevertheless, the continued high inflow of advanced ticket payments enabled Lufthansa Group to achieve an adjusted free cash flow (FCF) of €305 million ($323.9 million). However, that was about the only positive piece of news that the group was able to share about its short-term and medium-term financial outlook, as many other external factors should continue weighing down its airlines’ earnings potential.

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Continued financial impact

The group also provided a brief update to its Q2 and full-year outlook in the statement, saying that the next quarter’s results should also be negatively impacted by an additional €100 million ($106.1 million) due to the impact of the now-settled wage disputes on short-term demand, in particular, at the airline Lufthansa. Austrian Airlines’ results will also be impacted by labor disputes, the group noted.

Photo: Lufthansa Group

“In addition, the ramp-up of capacity in the second quarter is forecasted to be slightly lower than originally planned to support improvements in punctuality for the customers and because of delays in new aircraft deliveries.”

While forward-looking bookings are in line with original expectations, especially for the summer, which supports the Group’s forecast, Lufthansa Group slashed its adjusted EBIT and FCF outlook for 2024. Now, the company expects to end the year with an adjusted EBIT of €2.2 billion ($2.3 billion) and adjusted free cash flow of €1 billion ($1.06 billion), with its previous expectations being to have an adjusted EBIT on the same level as in 2023 (€2.6 billion, $2.7 billion). The expected FCF was at least €1.5 billion ($1.59 billion).

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Signing agreements with unions

Following several labor actions during the first three months of the year, Lufthansa signed two separate agreements with its unions, which represent its cabin crew members and ground handling employees. On March 28, Lufthansa and the United Services Trade Union (Vereinigte Dienstleistungsgewerkschaft, ver.di), which represents around 20,000 employees at Lufthansa, Lufthansa Technik, Lufthansa Cargo, and other companies, signed an agreement following arbitration. As a result, the ground staff will receive a 12.5% pay increase, disproportionately affecting lower and middle-income groups, an inflation compensation bonus, and other benefits.

Photo: Vincenzo Pace I Simple Flying

Meanwhile, the airline and the Independent Flight Attendants’ Union (Unabhängige Flugbegleiter Organisation, UFO), representing around 19,000 of its flight attendants, signed their agreement on April 11. The main accent of the agreement was a pay increase of 16.5%, with the contract having a no-strike clause. It runs out in 2026.

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