Lufthansa and Austrian Airlines Post Losses for First Quarter

Lufthansa and Austrian Airlines have both posted losses for the first quarter of 2012, which the airlines are blaming on increased fuel costs.

Deutsche Lufthansa AG generated revenue of $8.6 billion in the first quarter of 2012, 5.6 percent more than in the same period last year. The increase was mainly due to higher traffic revenue, which in turn stemmed from a higher sales volume and price increases in the passenger business.

However, increased fuel costs, the air traffic tax imposed in Germany and Austria and the costs of emissions trading in force in Germany since 2012 all had an adverse effect on the Group's operating result. The company saw a loss of of $278 million compared with the figure for the same quarter a year ago. Altogether, the net result for the period was close to -$521 million. The increase of $144 million is largely due to the negative changes in the time value of hedging options recognized in the first quarter of last year. Cash flow from operating activities rose to more than $1 billion and made it possible to generate a free cash flow of $708 million.

Austrian Airlines generated a result from operating activities of -$87.5 million, a decline of five percent from the previous year. The total operating income amounted to $609.3 million, a rise of 3.8 percent from the prior year.
Like Lufthansa, the airline attributes the loss to the increased fuel prices and the burden of increased taxes and fees. The costs for fuel and fees, which comprise some 50 percent of the company’s total operating costs, were $321 million million in the first quarter of 2012, a rise of $36 million from the prior-year quarter. Austrian Airlines CEO Jaan Albrecht said that the air travel tax, which was introduced on April 1, 2011, negatively impacts the business. “We cannot fully pass on the fees to customers due to the tough competition," he added in a statement.

On the plus side, Austrian's passenger numbers reached an historic all-time high in the first quarter of 2012. A total of 2.3 million passengers were carried by Austrian Airlines in the first three months, representing an increase of 10.1 percent.

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