LTP offers fast lane to connectivity
The increasing need to stay connected at all times prompted LHT to come up with Flexible Modification (FlexMOD) – making in-flight entertainment and connectivity (IFEC) available to passengers and staff in the shortest possible time.
Flexible Modification offers high speed IFEC solution to connect the passengers and digitize operation for airlines. The mobile modification bay is a highly dedicated fulfilment service for modification events. Within three months' preparation time, a core team of experts implement a setup to offer physical modification events outside the base maintenance environment or during a heavy check. This modification can also be adjusted depending on the customer's need.
With an experienced mobile team of experts, location won't be problem for FlexMOD. The service can be done even outside the hangar, this will maximize the time the aircraft is parked outside the base.
First to experience this new service in the Asia Pacific Region is LTP's leading customer, Philippine Airlines. Once installation is done, fast and reliable connection is guaranteed for the passengers and crew.
FlexMOD answers the increasing demand of on-board connectivity feature of today's aircraft. A brilliant feature to make sure passengers will have a way to stay on the loop and for the crew to have a seamless operation.
Lufthansa Technik Philippines breaks ground on facility expansion
New hangar to create 400 jobs in 2020, places PH as ideal aviation services hub in Asia-Pacific
Lufthansa Technik Philippines (LTP) the country's leading provider of Maintenance, Repair, and Overhaul (MRO) services officially announced the construction of its latest hangar during a groundbreaking ceremony held on November 27, 2019 at its Manila site at the MacroAsia Special Economic Zone, Villamor Airbase, Pasay City.
The new hangar, dubbed Hangar 1A, will be a replica of the existing Hangar 1, which currently services aircraft of various airlines, including the national carrier airline, Philippine Airlines and international lines like British Airways, Korean Air, Asiana Airlines, and Saudi Arabian Airlines.
With a total area of 9,000 square meters, the addition of Hangar 1A in LTP's facility will enable the MRO company to service more aircraft, including Airbus A380 aircraft, the world's largest passenger airliner.
This move is LTP's answer to the growing MRO demand in Asia-Pacific and further strengthens the Philippines as an ideal aviation services hub in the region.
"Lufthansa Technik Philippines has always been the country's forerunner in the MRO industry. As we approach our 20th year, it's about time we showcase the Philippines as an aviation stronghold in Asia-Pacific. The company strongly believes in the ability of the Philippines to be a hub for aviation services in the region, and proof of this is our expansion and continued commitment to the country," stated Elmar Lutter, President and CEO of LTP.
"This is made possible by our greatest asset—our local employees, who continuously strive to deliver globally-competitive services, enabling us to be the preferred partner of airlines in ensuring the safety and comfort of their passengers. With the expansion of our facilities and services through the construction of Hangar 1A, we will be opening LTP's doors to 400 more Filipino workers to help the Philippine MRO industry grow, together with the sustained growth of the Philippine economy," Lutter added.
Established in 2000, LTP is a joint venture of Hamburg-based Lufthansa Technik AG and Philippines' biggest aviation support service provider MacroAsia Corporation. With a strong presence in the country, LTP is currently employing 3,200 Filipinos across the key cities nationwide, including Clark, Cebu, Davao, Kalibo, and Puerto Princesa.
The construction of Hangar 1A will mark the tenth hangar bay in the MRO giant's Manila site, which provides base and line maintenance to various commercial aircraft including Airbus A320, A330, A350, and A380, as well as Boeing B777.
Lufthansa Group Adjusted EBIT for 2018 only slightly below prior year despite higher fuel and one-off costs
A successful 2018 for the Lufthansa Group
Results for 2018:
Adjusted EBIT of EUR 2.8 billion
Higher fuel costs, one-off costs from the integration of parts of the former Air Berlin fleet and increased expenses from delays and cancellations largely offset
Network Airlines report improved Adjusted EBIT
Adjusted unit costs reduced by 1.7 percent
Dividend again proposed at EUR 0.80 per share
Forecast for 2019:
EBIT margin of between 6.5 and 8 percent
Capacity growth in summer further reduced to 1.9 percent
Further reduction in unit costs
Substantial profit improvement expected at Eurowings
"2018 was another successful year for the Lufthansa Group in financial terms," says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. "We generated the second-best result in the history of our company. This is a great teamwork achievement by all the 135,000 people who make up our group workforce."
Total Group revenues for 2018 were a six-percent increase on the previous year. Burdened by the first-time application of the IFRS 15 accounting standard, total revenues were one percent up on 2017, at EUR 35.8 billion. The Adjusted EBIT for the year of around EUR 2.8 billion was only slightly below the record EUR 3.0 billion of the previous year, despite an increase of some EUR 850 million in fuel costs and EUR 518 million of expenses incurred through delays and cancellations (up a substantial 70 percent from the EUR 304 million of the prior year). In addition, the Eurowings result was burdened by some EUR 170 million one-off costs related to the integration of parts of the former Air Berlin fleet. Adjusted EBIT margin amounted to 7.9 percent (prior year: 8.3 percent). The net Group result for the year declined slightly to EUR 2.2 billion (prior year: EUR 2.3 billion).
Adjusted EBIT was affected by a change in the accounting of engine overhauls, which increased Adjusted EBIT for 2018 by EUR 122 million and decreased Adjusted EBIT for 2017 by EUR 4 million. Without this accounting change, Adjusted EBIT for 2018 would have amounted to EUR 2.7 billion.
Unit revenues adjusted for the first-time adoption of IFRS 15 and currency effects declined 0.5 percent for 2018 owing to lower unit revenues at Eurowings. Unit revenues were slightly above their prior-year level at the Group's Network Airlines, where higher unit revenues on long-haul routes (over the North Atlantic and to and from Asia) more than made up for lower short-haul unit revenues, especially in the second half of the year.
Profitable growth and cost reductions supported earnings trends. Unit costs adjusted for fuel price and currency movements were 1.7 percent down from their 2017 level (or 1.2 percent down excluding the change in the accounting of engine overhauls). The Network Airlines made an above-average contribution to the overall unit cost reduction.
"We continue to work on further reducing our unit costs year by year," confirms Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa AG. "We managed to do so in 2018 for the third year in a row. We are well equipped to invest in profitable growth and simultaneously further enhance our cost efficiency in the future, too."
The Lufthansa Group invested EUR 3.8 billion in 2018, a large part thereof in new more cost- and fuel-efficient aircraft. EUR 470 million of this amount is attributable to the changed accounting of engine overhauls. The Group's total aircraft fleet grew by 35 planes and numbered 763 aircraft at the end of the year.
"For our customers, we want to be the best airline group in Europe," explains Carsten Spohr. "At the same time, we are fully aware of maintaining sustainable business activities. This is why we continue to invest in advanced, low-noise and fuel-efficient aircraft. The 40 state-of-the-art long-haul planes that we ordered yesterday will replace the significantly less efficient four-engined aircraft in our fleet. As a result, we will have totally modernized our entire long-haul fleet by the mid-2020s." The fuel savings from this alone will amount to 500,000 tonnes a year, equaling 1.5 million tonnes of less carbon dioxide emissions.
The Lufthansa Group is able to make such investments because of the continuously strong balance sheet. Net financial debt rose 21 percent in 2018 to some EUR 3.5 billion (prior year: EUR 2.9 billion). However, the debt ratio (adjusted net debt in relation to Adjusted EBITDA) of 1.8 (prior year: 1.5) remained well below the Group's target maximum debt ratio of 3.5.
Free cash flow declined to EUR 250 million (prior year: EUR 2.1 billion). In addition to the slight earnings decline, this was primarily due to non-recurring working capital effects in the prior-year result. 2018 also saw increases in both variable compensation and taxes paid, which were both the result of the substantial earnings improvements of the previous year.
Pension provisions increased 15 percent to EUR 5.8 billion (prior year: EUR 5.1 billion), owing primarily to the challenging capital market environment. Return on capital employed (Adjusted ROCE) after taxes declined 1.3 percentage points to 10.6 percent (prior year: 11.9 percent), but remained well above capital costs.
"In view of these favorable results, which were achieved in a challenging market environment, we will propose to the 2019 Annual General Meeting that a stable dividend of 80 cents per share be distributed for the 2018 financial year," says Ulrik Svensson. "This will both enable our shareholders to participate appropriately in our company's success, while still giving us the strength to invest in our future growth." A dividend of EUR 0.80 per share corresponds to a dividend ratio of 13 percent of consolidated EBIT for the year.
The Group's Network Airlines – Lufthansa, SWISS and Austrian Airlines – achieved an aggregate Adjusted EBIT for 2018 of EUR 2.4 billion, a further six-percent increase on the record EUR 2.3 billion of the previous year. Adjusted EBIT margin amounted to 10.7 percent (prior year: 9.8 percent), an improvement of 0.9 percentage points. Unit revenues (adjusted for currency movements) for the year were up 0.3 percent, owing mainly to increases in long-haul operations. Unit costs (adjusted for fuel and currency influences and excluding the impact of the change in accounting) declined by 1.7 percent.
Earnings at Eurowings in 2018 reflected the growth leap that the airline experienced through its integration of large parts of the former Air Berlin fleet, and were burdened in particular by some EUR 170 million in non-recurring associated costs. The integration was completed by the end of the third-quarter period. Adjusted EBIT for the year declined to EUR -231 million (prior year: EUR 60 million), and Adjusted EBIT margin fell accordingly to -5.5 percent, a decline of 7.0 percentage points (prior year: 1.5 percent). Unit revenues (adjusted for currency movements) were 2.9 percent down on 2017, owing largely to the tough prior year comparison base. Unit costs (adjusted for fuel and currency influences and excluding the impact of the change in accounting) were 1.9 percent above their prior-year level. Excluding the non-recurring integration expense, however, such unit costs were 2.9 percent below their 2017 level.
The Group's logistics, technical services and catering business segments all raised their earnings for the year.
The logistics segment with Lufthansa Cargo increased its record Adjusted EBIT of 2017 by a further two percent to EUR 268 million (prior year: EUR 263 million).
Adjusted EBIT for Lufthansa Technik was also two percent up at EUR 425 million (prior year: EUR 415 million).
The catering business of the LSG Group achieved an Adjusted EBIT for 2018 of EUR 115 million (prior year: EUR 66 million), a year-on-year increase of 74 percent.
The Adjusted EBIT for Additional Businesses & Group Functions declined 45 percent to EUR -189 million (prior year: EUR -130 million), primarily affected by the non-recurrence of positive effects in the prior year.
The Lufthansa Group will be focusing in 2019 on achieving sustainable quality growth. Therefore, the Group is further reducing the capacity growth for its airlines for the upcoming summer to 1.9 percent. Despite this, the Group expects to report mid-single-digit percentage annual revenue growth.
Cost reductions will make a sizeable contribution to offsetting the EUR 650 million of additional costs that are expected to be incurred by the airlines owing to higher fuel costs. Overall, the Group expects to post an Adjusted EBIT margin for the year of between 6.5 and 8.0 percent. Eurowings is expected to achieve a breakeven Adjusted EBIT, which would be a substantial improvement on its 2018 earnings result.
Lufthansa Technik to hire 1,200 new staff
Lufthansa Group seeking over 5,000 recrucits - LT planning expansion in Hamburg
Lufthansa Technik is aiming to hire 1,200 new staff across Germany to boost growth in 2019, a press release said Tuesday (January 1, 2019). The move is part of the Lufthansa Group's plans to hire some 5,500 new employees across its home markets in Germany, Austria, Switzerland and Belgium.
From technical know-how to IT
Lufthansa Technik wants to hire several hundred employees nationwide in engineering and logistics. An additional 400 university graduates and trained specialists are being sought as direct entrants and more than 200 trainees mainly in Hamburg and Frankfurt. Last November, Lufthansa Technik was named one of the best training companies in Germany by the business magazine Capital. The Lufthansa Group is also searching for more than 600 IT specialists across Germany.
Global aviation group with over 500 job profiles
Lufthansa Technik is one of Hamburg's biggest employers and has a present workforce of 7,500 staff including 500 engineers. According to the globally operating Lufthansa Group, more than 170,000 people applied for over 500 different jobs in 2018. "This shows once again how popular the Lufthansa Group with its various business segments is as an employer," said Bettina Volkens, Executive Vice President Human Resources & Legal at Deutsche Lufthansa AG.
Soeren Stark joins Executive Board of Lufthansa Technik with responsibility for Technical Operations, Logistics & IT
On 1 January, Soeren Stark joined the Executive Board of Lufthansa Technik AG with responsibility for Technical Operations, Logistics & IT. He was appointed to this position in September 2018 by the company's Supervisory Board. Stark, who has a degree in business engineering, will assume responsibility immediately for fleet services, base maintenance, components, logistics, IT and quality management. In this function, he will also serve as the accountable manager correspondent to EASA Part 145, EASA Part 21/G and EASA Part M. Stark has worked in various Lufthansa Group companies. Most recently, he served on the Executive Board of Lufthansa Cargo. Prior to that, he headed both the aircraft overhaul and logistic services divisions at Lufthansa Technik, among other things. On the Executive Board of Lufthansa Technik AG, Stark succeeds Dr. Thomas Stueger, who served the Board for more than 14 years and retired in December.
LHT Chairman Concerned About Digital Transformation for MRO
Airlines need to control their data and be able to choose who uses it. This is the only way to create genuine competition for data-based services.
Digitalization has reached aviation, and it will change our business permanently and irreversibly.
The information generated by thousands of additional sensors and digitalized systems in the latest-generation aircraft presents an exponential leap in data availability and quality. And with the volume of operational data unquestionably multiplying even further with each aircraft generation, the market for technical services is becoming all the more promising. Even so, the advent of new, data-based services for technical operations, fleet planning and beyond leaves airlines with great uncertainty about how their data can and will be used; they are trying to assess individual risks and benefits when it comes to digitalization in maintenance.
Real-time access to data from flights is crucial for operators in fulfilling their responsibility for the airworthiness of their fleets and safe operations. However, the new aircraft types also enable data to be transmitted in encrypted form to the manufacturer, which then ultimately has the power to decide how that data is used. In this digital-knowledge monopoly, aircraft operators no longer will be able to acquire their own operational data easily—independent, free of charge and unencrypted.
This is a threat both to the independence of airlines and the MRO industry—and it has implications for data protection and flight safety. That's why I want to be crystal clear on this point: The operational data belongs to the airlines—not to the airframers, not to MROs and not to anyone else.
Control, Choice and Competition
Platforms that relinquish full control of data to just one organization do not reflect my understanding of independence and data ownership. It is in the interest of the industry that aircraft operators should have open and free access to their operating data at all times—something we break down into control, choice and competition. Airlines must be able to control access to the data produced by their aircraft. They also need to be able to compare offers from different providers of data-based services and choose freely who can use their data for what purpose. This is the only way to generate competition in data-based services. Here, I am also thinking of the OEMs' efforts to create digital tools for better prediction of component failures.
Again, competition produces the best solutions for the airlines. I emphasize that we do not want to prevent competition but to safeguard it. For us, the way to achieve this goal is pooling the industry's strengths beyond the boundaries of competition and establishing a neutral entity in which regulators and key organizations like the International Air Transport Association also have a say. MRO providers, airlines and other market participants thus need to find common ground for the creation of a truly independent, digital, industry platform.
With such an independent and open platform, clear distinctions must be made between the storage of data, its analysis and its use. Airlines must have the freedom to store their data on the platform and decide how to use it. For us, the secure storage of data never has been an issue. As a German company, we are based in a nation that implements the General Data Protection Regulation and thus defends data privacy at a high level.
Ultimately, though, this is not just about storage and provision of data. I am convinced the real value is in how you use the data. This is where competition is needed that is open to ideas, solutions and a breadth of skills that no single company—not even a market leader—can claim to provide alone.
Prediction Needs Fulfillment
The MRO industry is ready to take on the challenge of responsible data use. The cumulative knowledge that comes from an independent shop, from engineers' abilities to assess the condition of a component, spot trends and find solutions, will enable MRO providers to make sustainable predictions that stand firm in the face of the reality of airline operations. What's more, I am convinced the monitoring and forecasting processes for individual components will become so good that their technically feasible life cycles can be used to the fullest extent without incurring additional risks.
In the long run, this will make it possible to move away from the current system of rigid maintenance schedules with their fixed intervals that apply to each individual aircraft type and toward the level of every individual component and the individual airline's operational profile. Integrating the new opportunities offered by digitalization with the proven fulfillment of an MRO provider in this way will enable airlines to have confidence in the greater efficiency, reliability and safety they legitimately demand.
Lufthansa Group mourns the loss of Wolfgang Mayrhuber
Wolfgang Mayrhuber, former Chairman and CEO of Deutsche Lufthansa, passed away last Saturday, December 1, 2018, at the age of 71, due to a serious illness.
Carsten Spohr, Chairman of the Executive Board of the Lufthansa Group, expressed his deep sympathy on behalf of the 134,000 employees of the Lufthansa Group: "Wolfgang Mayrhuber has served and shaped our company for more than 45 years. We Lufthansa employees thank him for his great service to the Lufthansa Group. Our thoughts are now with his family".
Wolfgang Mayrhuber worked for Deutsche Lufthansa for over 40 years. As an engineer, he began his corporate career in 1970, in Hamburg, in the field of engine maintenance. After holding various management positions, Mayrhuber was appointed Chairman of the Executive Board of the newly founded Lufthansa Technik in 1994, having played a key role in shaping the successful development of the company into a leading global service. In 2001 he was appointed the Group Executive Board with responsibility for "Passenger Services", and in 2002 he was appointed to Deputy Chairman of the Executive Board. From 2003 to 2010 Wolfgang Mayrhuber was Chairman of the Executive Board of Deutsche Lufthansa.
With the successful acquisitions of SWISS, Austrian Airlines and Brussels Airlines, he had a lasting impact on the Airline Group. Wolfgang Mayrhuber was Chairman of the Supervisory Board from 2013 to 2017.
Lufthansa Technik developing AVIATAR platform
Lower operating costs likely with apps using digital twins
Big data is key to predictive maintenance and lower costs for industrial repairs especially in the automotive and aviation industries. More than half of an airline's total operating costs are directly or indirectly related to maintenance, repair and overhaul (MRO) services. Promoting the intelligent use of big data is a top priority for many airlines including Lufthansa.
Combined apps on a platform
Lufthansa Technik and its partners are now striving to achieve this goal using the AVIATAR open platform. Innovative and holistic, AVIATAR offers a variety of digital products and services for MRO by combining multiple apps, web-based in one place. The more users of the platform the better as everyone benefits from optimized operating times, reduced follow-up costs and safer and more reliable fleet operation.
Coupling virtual and real world
One of the new apps is named "Engine Health Management". This diagnostic tool for maintenance of aircraft engines is based on a digital twin that digitally represents the real object. Digital twins use real data to play through a variety of scenarios and gain valuable insights. Through this coupling of virtual and real worlds, problems can be understood and dealt with before they occur and solutions can be tested for their effectiveness in simulations. Companies such as Philips, Siemens or Porsche already rely on digital twins.
Engine Health Management app
The digital twin of a physical engine has such a high level of detail that the influence of a single component on the entire engine can be determined. This allows engineers e.g. to determine the cause of a specific engine deviation. Optimally adapted warnings also ensure that unusual wear or unforeseen damage developments are detected early. In this way, the Engine Health Management app ensures that material costs, overall costs and performance are in proportion to each other.