Lufthansa Technik Achieves Triple-Digit Million Result Despite Strong Headwinds

 

Despite considerable challenges, Lufthansa Technik once again realized a triple-digit million result in the first quarter of 2024. After last full year’s record result, however, the global market
leader in aircraft maintenance, repair and overhaul (MRO) started the year weaker than expected with an Adjusted EBIT of 116 million euros (previous year 135 million euros). This is mainly due to the effects of the strikes in Germany in recent months. The continuing difficulties in the supply of materials across the industry and
disproportionately high cost increases are also having a negative impact.

“Of course we are pleased to have earned more than 100 million euros in the first quarter of 2024 as well,” says Dr. William Willms, CFO of Lufthansa Technik. “The bottom line, however, is that our Adjusted EBIT fell by 14% compared to the same prior-year period despite significant revenue growth. This illustrates the efforts we have to make to increase our margin.” Despite the difficult first quarter, Lufthansa Technik aims to achieve a result for the full year on par with the previous year.

Revenue in the first quarter of 2024 was 1.8 billion euros, thus 15% higher than in the same prior-year period. The Adjusted EBIT margin, i.e. the ratio of earnings to revenue, is therefore 6.6 percent (previous year 8.8 percent) and is currently well below the prospective figure of 10 percent targeted by Lufthansa Technik.

Number of employees increases to more than 23,000
On a positive note, Lufthansa Technik continues to be a sought-after partner for customers worldwide. After the company signed more than 1,000 new contracts last year, acquiring new business worth eight
billion euros, a further 174 contracts were signed in the first quarter of this year – including, for example, contracts for engine maintenance services for the Philippine airline Cebu Pacific or the expansion of the successful cooperation with the German leisure airline Condor in the area of component support.

Lufthansa Technik is also making progress in recruiting new employees. At the end of March 2024, more than 23,000 people were working for the company. “The number of our employees has increased by more than 2,000 within a year. This is a strong sign of how attractive our company is,” says William Willms. Lufthansa Technik is planning a further four-digit increase in the number of employees for 2024 as a whole. At the same time, the rising personnel costs, particularly at the German sites, are an issue that will occupy the company considerably in the coming years.

“Having reached a compromise with the union in the recent collective bargaining negotiations for our employees in Germany was good news. It is important that the salaries of our colleagues develop well in view of what they do for our company every day,” says William Willms. “In addition to the financial damage caused by the strikes, however, the lasting impact on our cost structure will be considerable. We will have to become much more efficient to compensate for this.”

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