Joanna Plucinska and Ilona Wissenbach
LONDON/FRANKFURT (Reuters) – Lufthansa reported an operating profit of 2.7 billion euros ($2.94 billion) in 2023 on Thursday, as expected, revising its 2024 operating margin forecast to 7.6% from target of 8% due to labor issues. disputes.
The impact of the strikes and falling logistics profits will lead to higher expected operating losses in the first quarter than in previous years, offsetting strong post-COVID travel demand, the German airline said.
“The group remains committed to its goal of delivering a sustainable adjusted EBIT margin of at least 8 percent,” the company said in a statement.
European airlines have benefited from unprecedented post-pandemic demand, allowing them to raise prices, but higher labor and maintenance costs have limited revenue growth.
Lufthansa in particular agreed to new wage increases to end strikes that analysts and investors say threaten its 2024 operating profitability target.
The airline’s employees voted to strike on Wednesday, demanding a 15% pay rise, a potential harbinger of further declines in profits.
The results came nearly two weeks after the airline announced the surprise departure of respected chief financial officer Remco Steenbergen, sending its share price plunging and shaking investor confidence.
Operating profit in 2023 rose 76% from 1.5 billion euros ($1.63 billion) in 2022. Revenue of 35.4 billion euros ($38.58 billion) was up nearly 15% from 31 billion euros ($33.79 billion) in 2022, but was lower than 36.3. billion euros ($39.56 billion), as expected in a survey conducted by the company.
DIVIDENDS
Despite the adjustment to its target operating margin, the company said its results were strong enough to propose a share issue at €0.30 per share for voting at the annual general meeting on May 7.
The group has not paid dividends since 2019.
The carrier’s shares have outperformed those of European rival flag carriers Air France-KLM and IAG since the start of 2022, as the region’s travel industry has recovered from disruptions caused by the COVID-19 pandemic worldwide since 2020.
Last week’s results from IAG, owned by Air France and British Airways, drew attention to the industry’s problems, from high jet fuel prices to geopolitical flashpoints, problems at aircraft manufacturers and wage negotiations.
Lufthansa shares trade at five times expected earnings over the next 12 months, compared with four for IAG and three for Air France-KLM.
($1 = 0.9175 euros)