Lufthansa Technik: Result significantly improved even with stagnating revenues

As one of the world’s leading providers of technical aircraft
services, the Hamburg-based Lufthansa Technik Group was able to
significantly increase its result in 2012 even with a slight decline
in revenues to 4.01 billion euros. The annual report of the 23
consolidated Lufthansa Technik Group companies shows an operating
result of 318 million euros.

“Considering the strained situation of many airlines, especially in
Europe, the overcapacity in the maintenance, repair and overhaul
(MRO) market and heavy pressure on price levels, Lufthansa Technik
Group has developed very positively,” said August Wilhelm Henningsen,
Chairman of the Executive Board of Lufthansa Technik, on March 19 in
Hamburg. Highlights of the year included the successful entry into
service of the Boeing 747-8 at Lufthansa and the start of technical
services for the Boeing 787. In addition, the Lufthansa Technik
network with its 30 international production sites has been developed
further, and the company moved forward intensively with research and
development work as well.

“We were able to achieve this good result because many of our cost
reduction measures are taking effect and we have been able to reduce
the work required in many processes. In addition, a large number of
new contracts contributed to our result in 2012,” explained
Henningsen. In order to secure the company’s competitiveness over the
long term, however, further measures to reduce costs and increase
revenues have been introduced as part of the Lufthansa Group program
SCORE, including restructuring programs in the larger production
areas as well as targeted sales activities and more efficient
administration.

“We have already implemented many innovations in production and
optimized processes there, and we are now striving for similar
improvements in administration.” This area of Lufthansa Technik was
analyzed by more than 200 experts from across the company with the
objective of greater efficiency in all functions that are not
directly productive. The reorganization of its structure and
processes will mean the elimination in Germany of a prospective 650
jobs by the year 2015, of which approximately 400 are in Hamburg. The
reorganization will be implemented in a socially responsible manner.

The development of the international Lufthansa Technik network in
2012 was marked by both portfolio streamlining and capacity
expansions. LTQ Engineering in Melbourne, Australia was closed owing
to lack of demand for services. Lufthansa Technik Switzerland in
Basel will discontinue operations in April due to reduced demand for
line maintenance services. In contrast, Lufthansa Technik Philippines
is now offering comprehensive A380 services in its new widebody
hangar in Manila, and Lufthansa Technik Sofia has doubled its
capacity to five overhaul lines through a new complex of hangars.

Currently Lufthansa Technik looks after more than 730 customers and
over 2,200 aircraft around the world. In 2012 the company won 45 new
customers and concluded more than 500 new contracts. The total sales
volume in 2012 from these contracts alone amounted to 480 million
euros.

Lufthansa Technik enjoys a solid market position, according to
Henningsen. “We will continue our course for growth, and set
ourselves apart in the market through our quality, the strength of
our innovations and our worldwide presence. And this market position
will be solidified and expanded even more through the successful
implementation of the SCORE measures. That is why Lufthansa Technik
will emerge from the consolidation in the airline and MRO markets
even stronger than it is today.”