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Lufthansa posts profit gain
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August 23, 2000: 8:30 a.m. ET
Half-year earnings jump 18%, but fuel-price concerns depress stock
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LONDON (CNNfn) - Deutsche Lufthansa AG said Wednesday its first-half profit soared 18 percent as more passengers chose to fly with the German carrier to North America, Asia and the Middle East, but concern about higher fuel costs weighed on shares of Europe's second-largest airline.
Frankfurt, Germany-based Lufthansa said operating profit rose to  349 million ($311.6 million) from 296 million a year earlier. The company raised its forecast for growth in full-year operating profit to 15 percent from a previous estimate of 10 percent.
"These results are solid but traffic growth has been offset by fuel costs,"  Martin Borghetto, an analyst at Morgan Stanley Dean Witter told CNNfn.com, describing the earnings as in line with his forecast. "Transfer traffic from the Star Alliance has helped momentum."
Just like its counterparts British Airways PLC (BAB: Research, Estimates) and Switzerland's SAirGroup, Lufthansa felt the pinch from higher fuel prices. Brent crude oil earlier this week traded at $30.81 a barrel, more than 26 percent higher than its level six months earlier.
Shares in Lufthansa dived 3.4 percent, or 1.89, to 25.11 in midday trade in Frankfurt.
"The big question going forward is oil prices," said an analyst who asked not to be named. "There's nervousness in the market despite ambitious noises from Lufthansa."
Net income tripled to 460 million for the six months to the end of June, boosted by a sharply lower tax bill and a capital gain, worth 378 million  before tax, from the sale of the group's stake in travel distribution company Amadeus Global Travel Distribution SA. Sales rose 18.8 percent to 6.9 billion, beating analysts' expectations.
Lufthansa said its passenger numbers rose 7.1 percent to 22.6 million. Capacity grew by 7.7 percent from the first-half of 1999, while the airline unit's sales - Lufthansa also operates engineering and catering divisions -- rose 9.8 percent. The Airline has also benefited from its membership of Star Alliance, an airline group that includes United Airlines (UAL: Research, Estimates), Japan's All Nippon Airways and 14 other airlines.
"The higher number of flights, a steep rise in fuel prices and the weakness of the euro caused expenditure on kerosene to soar by 64.4 percent to 245 million, despite comprehensive price hedging measures," the company said.
The airline said its freight unit Lufthansa Cargo AG benefited from an improvement in the world economy, lifting the tonnage of freight carried by 3.9 percent to 879,000 tons and boosting capacity utilization by 0.5 percentage points to 67.5 percent. 
--from staff and wire reports
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Lufthansa
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