Cape Town - Earnings growth by the Lufthansa Group was primarily by its airlines, including cargo, the group said on Thursday when it announced its results for 2017.
Adjusted earnings before interest and taxes (EBIT) increased around 70% to about €3bn and the adjusted EBIT margin raised 2.9 percentage points to 8.4. Revenues were up 12.4% to €35.6bn.
The group said it managed to further reduce its unit costs. It proposed a 60% higher dividend at €0.80 per share.
In its outlook for 2018 the group said it expects stable unit revenue development with unit costs to be further reduced by 1% to 2%. Higher fuel costs of some €700m are expected to be largely compensated by improved operating performance.
Adjusted EBIT for 2018 is expected to be only slightly below its record in 2017.
“Our endeavours of the past few years are paying off. Our modernisation has a sustainable impact. We have achieved the best result in the history of our company. Last year was a very good year for our customers, our employees and our shareholders,” said Carsten Spohr, chair of the executive board and CEO of Deutsche Lufthansa AG.
“Last year we were able to reduce costs again, while at the same time becoming the first – and the only – airline in Europe to be awarded a five-star rating. We are lowering our costs where this does not affect the customer, and are simultaneously further investing in our product and service quality.”
The Lufthansa Group invested some €3bn in 2017, around a third more than in the previous year. This is partly due to investments of some €900m in aircraft from the Air Berlin flight operations.
Despite the higher capital expenditure, free cash flow almost doubled in 2017 to €2.3bn. Net financial debt rose 6.8% to €2.9bn. This figure includes an initial €1.7bn funding for the new defined contributions model of the flight attendants’ pension fund. The year-end equity ratio stood at 26.5%, an increase of 5.9 percentage points.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER