17.03.2015

Foundation for profitable growth: Cost management and investment strength

Dr. Peter Jansen: Securing our course for growth

In fiscal year 2014, the Lufthansa Technik Group increased its sales revenue by 3.8% to EUR 4.3 billion. Owing to a large modification program for Lufthansa, the 5% increase in Lufthansa Group business was higher this year than growth in business with the company's nearly 800 non-Lufthansa Group customers around the world, whose share in total revenues was 61.7%. With a margin of 9.4%, the operating result of EUR 392 million lay just under the previous year's high level.

According to Chief Executive Finance, Dr. Peter Jansen, an important factor in securing Lufthansa Technik's economic success was the company's contributions to Lufthansa's efficiency-enhancing future program SCORE: a variety of projects for reducing costs in all the product divisions, the restructuring and streamlining of Lufthansa Technik's administration, the consolidation and development of its network, and a sales approach that concentrates on growth regions.

Jansen described the key financial figures at the Lufthansa Technik Group as solid, as they were the previous year. At EUR 118 million, investments were not quite as high as last year, but remained higher than the long-term average. The largest share went for the purchase of spare engines and technical facilities as well as for technology and innovation projects that are part of the company's growth strategy.

Operating expenses climbed by 2.9% in 2014 to reach EUR 4.1 billion. Owing to the higher volume of modifications and an increase in engine maintenance business, the cost of materials rose 4.1% to EUR 2.2 billion. Personnel costs (EUR 1.2 billion) declined slightly as a result of consolidation within the network and the shift of administrative work.

Despite growth in revenues, Lufthansa Technik is continuing its restrictive policy as regards new hires. This and the closures and restructurings of some of its companies resulted in the average workforce remaining stable at 20,085 employees, which is comparable to last year (+ 0.8%).

"Following our successful cost and efficiency management in 2014, the continuation and implementation of all the various SCORE measures will naturally remain on the agenda," Jansen emphasized. The volume of the measures planned for this year amounts to EUR 175 million. "Part of securing a course for growth that is at least as strong as the market is the implementation of our core project ‘We Grow', which is intended to result in significant increases in revenue by 2018." It focuses primarily on strengthening sales in the growth regions Asia and the Americas as well as expanded cooperation management with all the Group's airlines.

"Sustainably profitable growth assumes that we can strike a balance between new growth and innovation projects, additions to our staff, new IT projects, etc., and yet continue to pursue our long-term requirement of increased cost efficiency in all our administrative and production areas. This is the only way to remain competitive and grow steadily and continually."