Lufthansa Technik increases 2010 revenues, but with lower result

Toward the end of the first year after the economic and financial crisis, Lufthansa Technik Group was able to profit increasingly from the recovery of the maintenance, repair & overhaul (MRO) market, and boosted its revenues by a total of 1.4 percent. As expected, however, the operating result could not be held at the high level of the previous year; in spite of the improved revenue situation, the company’s earnings before tax (EBT) declined by 4.2 percent to EUR 282 million.

“MRO businesses are late indicators in the aviation industry and as such Lufthansa Technik’s revenue initially declined in 2010, but during the second half of the year it rose to exceed the previous year’s levels,– said Dr. Peter Jansen, CFO of Lufthansa Technik AG on March 22, 2011 in Hamburg. “However, some customer revenue was lost as a result of the crisis, and that led to shortfalls in our result."

Revenue from other companies in the Lufthansa Group declined by 1.3 percent owing to lower numbers in ground maintenance events and prices that were reduced for competitive reasons, but revenue from business with customers outside the Group grew by 3.3 percent to EUR 2.4 billion, and as a result, its share in total revenue climbed slightly to 59 percent. The operating margin was 7.0 percent in 2010. Average annual growth in revenue has amounted to 4.6 percent since 2001.

“Lufthansa Technik Group’s profitability remains at a healthy level,” Jansen went on. “With an equity ratio of 26.4 percent and a debt-to-equity ratio of 29.4 percent, our financial situation continues to be very solid, even in 2010.

Lufthansa Technik invested a total of EUR 82.1 million in 2010 in a new engine test center at Lufthansa Technik Aero Alzey, additional reserve engines, and technical systems and machines. This level is somewhat lower than the investment high of fiscal 2009, but that year included, among other things, the equipping of Lufthansa Technik’s new A380 maintenance hangar in Frankfurt.

Operating expenses in 2010 climbed by EUR 157 million to reach EUR 4.0 billion – a plus of 4 percent. The growth in revenue from engine and component maintenance made itself felt in an additional EUR 77 million in material costs – likewise a plus of 4 percent over last year. Personnel costs rose by EUR 42 million (4 percent), owing to an increase of 539 employees in the average yearly workforce. Other operating expenses rose by EUR 31 million ( 5 percent) to EUR 710 million, largely through higher provisions and the increased use of temporary employees.

The total workforce of all 21 consolidated companies climbed to an average of 20,297. In some facilities the number of employees was reduced, but two companies, Lufthansa Technik Budapest and Lufthansa Technik Malta, were consolidated this year for the first time, resulting in an additional 539 employees on average.