Mar 13, 2008
Lufthansa Technik increases sales and profit in 2007 

Focus is on further cost reduction and greater efficiency

In the maintenance, repair and overhaul (MRO) market for commercial aircraft, which is still growing, the Lufthansa Technik Group reports a 6.7 percent rise in external revenues and pre-tax earnings of 287 million euros in 2007. This represents an increase of 18.6 percent over the previous year. The current Annual Report shows a total revenue of 3.6 billion euros for the 19 consolidated companies within the Lufthansa Technik Group.

"As in previous years, the very positive development with airline customers outside the Lufthansa Group contributed significantly to the growth of the group's earnings," said Chief Executive Finance Dr. Peter Jansen at the company's annual press conference, which was held on March 13 in Hamburg. Compared to the previous year, the share of the Lufthansa Technik Group's external revenue grew by 1.3 percentage points to 61.2 percent. Revenue returns stood at 8 percent, compared with 7.1 percent for the previous year.

Lufthansa Technik's competitiveness improved thanks to greater flexibility in working hours and an increase in efficiency and productivity, Dr. Jansen continued, "but precisely because of the increasingly competitive disadvantages in Europe owing to the weak dollar, we will have to achieve double-digit percentage reductions in cost units and improvements in productivity at all production facilities with site costs in euros." These disadvantages can only be compensated for by producing the highest quality, avoiding errors and by continuing with projects to achieve lower costs and increase efficiency. In 2007, we already proved that it's possible."

The number of new contracts signed in 2007 climbed by 12 percent to 456. The volume of business from these new contracts rose by 50 percent to around 3 billion euros for their full term. Lufthansa Technik is currently working with a total of 630 customers and provides support for over 1,500 aircraft.

The Chief Executive Finance described the Lufthansa Technik Group's financial situation as very solidly stable. At the end of 2007, the equity capital ratio stood at 21.9 percent and the debt ratio at 25.2 percent. Operational expenses increased by merely 4.5 percent in 2007 owing mainly to an increase in material requirements, and were therefore at the same level as the rise in revenues (+4.6 percent). Owing to an increase of 644 in the number of employees in the consolidated group and in the provisions for partial retirement schemes, personnel costs increased by 7.6 percent.

In 2007, investments grew sharply, by 83 million euros to 194 million euros. Investments were made in purchasing additional spare engines, new machines and technical facilities, as well as in the construction of the A380 maintenance hangar in Frankfurt and a service building in Hamburg. Lufthansa Technik is continuing to invest in Germany on a high level. Around 50 million euros is being invested in the new Hamburg engine center, for which the cornerstone was laid in February 2008. Also in Hamburg, a new research and development center is being built from scratch, with an estimated investment volume of 10 million euros.

Furthermore, Lufthansa Technik is investing more than 80 million euros in the expansion of the landing gear and ARC (Airframe Related Components) shops in Hamburg, including the necessary buildings, facilities and spares.

The headcount of the 19 consolidated companies grew on an annual average by 3.5 percent to 18,733 employees worldwide. Lufthansa Technik employs over 25,000 people in its direct and indirect affiliates.

Customer-specific products, quality, the ability to innovate, worldwide logistics services and process-related cost advantages are Lufthansa Technik¡¯s strengths, and they will continue to be developed. In light of the industry's general growth, and in spite of increased competition, Lufthansa Technik expects continued growth in revenues in 2008. A slight increase is expected in the group's operating results, though these may be affected by the weakness of the dollar.