Lufthansa cuts losses by half in first six months

Lufthansa reported better than expected results for the second quarter and first half of 2010 as the recovery in demand for passenger and freight traffic helped mitigate some of the losses incurred in the first quarter.

It reiterated that it expects operating profit and revenue to rise in 2010,reported Dow Jones Newswires.

Lufthansa said that in the six months to June 30 it posted a net loss of $140.85 million, compared with a loss of $292.53 million in the same period last year. The figure exceeded the $289.83 million average net loss forecast by 12 analysts polled by Dow Jones Newswires.

"Overall, the momentum behind the performance of the business has further increased the confidence to reach our profitability targets," the company said.

The German flagship airline said it still expects full-year 2010 earnings to increase from the US$176 million it reported for 2009, despite higher costs for fuel, strikes and bad weather that burdened first-quarter earnings, and lost revenue due to the volcanic ash cloud that grounded much of European air traffic for nearly a week in April.

Continued losses at newly acquired Austrian Airlines and British Midland Airways, or bmi, also burdened results, it said.

Still, Lufthansa said that it is experiencing "positive demand trends, above all in the freight and intercontinental passenger businesses".

Lufthansa's closely watched operating profit in the first half came in at a loss of $231.59 million, compared with a profit of $10.83 million in the prior-year period. Around $270.86 million in operating earnings was lost in the second quarter due to groundings caused by the volcanic ash cloud.

In the second quarter, operating profit was $215.34 million compared with $70.42 million a year ago. Second-quarter revenue was $9.34 billion, up 32.7 percent from $7.04 billion.

Meanwhile, Lufthansa Cargo plans to reactivate two grounded freighter aircraft faster than previously announced, unit spokesman Nils Haupt told Dow Jones Newswires.

Haupt said that the company decided to take the planes into operations faster than initially planned following the decision of Japan Airlines earlier this year to suspend freighter flight services. Lufthansa Cargo intends to use this opportunity for cargo traffic between Japan and Europe, he added.

"One of the grounded MD-11 planes will be reactivated in autumn 2010," Haupt said. The other aircraft will resume service next year, he added.

In June, Lufthansa Cargo had expected that both planes would be reactivated in 2011.

In the financial and economic crisis, Lufthansa grounded four of its freighter aircraft due to plummeting demand for cargo traffic. The first of these planes was reactivated in May, the second followed in July.

Driven by the recovery of the broader economy, demand for air cargo services has rebounded strongly over the past few months. In June, Lufthansa Cargo recorded a 25 percent year-on-year increase in sales with transported tonnage increasing by nearly 20 percent on the year in the first six months of the year.

In May, Lufthansa said it expects its cargo unit to post an operating profit in 2010, compared with the $231.59 million operating loss in the previous year.
(Source:www.cargonewsasia.com)