Lufthansa soars to record profits in 2017

FRANKFURT AM MAIN: German airline giant Lufthansa reported record profits for 2017 Thursday, celebrating a year that saw it bury a smouldering dispute with pilots and gobble up parts of defunct rival Air Berlin.

Net profits at the group -- which includes Lufthansa, Eurowings, Swiss, Brussels Airlines and Austrian Airlines -- rose 33.1 percent to hit 2.36 billion euros ($2.92 billion), higher than the 2.28 billion predicted by analysts.

It was the "best result in the history of our company," chief executive Carsten Spohr told a Frankfurt press conference, adding that he would press on with cutting costs and modernising the carrier.

The 51-year-old recently agreed a five-year extension of his contract at the head of the firm, to the end of 2023.

Settling a pay and pensions battle that had sparked multiple walkouts by the firm's 5,400 pilots bestowed a 582-million-euro one-off windfall on the 2017 accounts.

Meanwhile, profits were further boosted by the full integration of Brussels Airlines into Lufthansa's business after a final takeover in late 2016, the addition of aircraft belonging to now-bankrupt Air Berlin to the carrier's fleets, higher ticket prices and a surge in the cargo business.

With Lufthansa carrying some 130 million passengers in 2017, "our planes have never been fuller" than during the period when Air Berlin's aircraft were grounded, CEO Spohr said.

But there had been a "neutral" impact on profits as the firm had to take costly emergency measures to boost capacity, he added.

Revenues at the group grew 12.4 percent to reach 35.6 billion euros, for an operating profit adjusted for special items up 70 percent compared with 2016, at almost 3.0 billion euros.

Lufthansa was blocked from taking over all 80 of the former Air Berlin planes it originally wanted, giving up plans to buy Austrian Air Berlin subsidiary Niki.

Most of the new aircraft it secured in the deal will be operated by its low-cost division Eurowings, generating further costs over 2018 but with "a positive effect" on the bottom line next year, Spohr said.

- More mergers in sight -

The chief executive reiterated his long-held view that more airline mergers are needed in Europe, adding that Lufthansa would play an "active role" in consolidation of the sector.

It is one of the only competitors interested in taking on part of troubled Italian carrier Alitalia's business.

Lufthansa said it will offer shareholders a dividend of 0.80 euros per share for 2017, some 60 percent higher than the previous year's.

Looking ahead to 2018, Lufthansa aims for an adjusted operating profit "slightly below" last year's level despite more stable ticket prices and lower costs.

It pointed especially to a forecast increase in fuel costs of around 700 million euros that would sap the result.

And the group must spend heavily to increase capacity at Eurowings to 210 aircraft by 2019, as it faces challenges from low-cost competitors like Easyjet and Ryanair.

Shares in Lufthansa gained 1.7 percent to trade at 26.6 euros by 1325 GMT, outperforming the DAX index of leading German shares.