Lufthansa Technik Group: Good result creates foundation for investment in competitiveness and growth

- SCORE measures important contribution to the result
- Dr. Peter Jansen: Perseverance is key

Lufthansa Technik Group’s 4.2% increase in revenue to 4.2 billion
euros in 2013 was characterized by stable business development within
the Lufthansa Group and an increase in business with external
customers, whose share of the total revenue rose by 1.7% to reach
62.2%. The operating result improved considerably, climbing by 23.2%
to 404 million euros, with an operating margin of 10.9%.

“In addition to the good order situation, it was above all the
significant cost reductions resulting from the SCORE program’s
measures that made our excellent result in 2013 possible,” said Dr.
Peter Jansen, CFO of Lufthansa Technik AG on March 18 in Hamburg. “We
were able to respond to the high price and cost pressures in the
market with a reduction in unit costs, more efficient administration,
the restructuring of our network and numerous individual measures. On
this basis, we will further improve the competitiveness of the
Lufthansa Technik Group through the introduction of new aircraft
types and state-of-the-art technologies and the focused continuation
of our SCORE program.”

Jansen described the key financial figures at the Lufthansa Technik
Group, with its 23 consolidated companies, as continuing to be solid
and stable. At 136 million euros, investments in 2013 exceeded both
the previous year’s level and the long-term average. The company once
again focused its investment activities on the purchase of reserve
engines, the acquisition of licenses, the construction of a new
building for Central Materials Technology in Hamburg as well as
technical equipment and machines.

Total operating expenses grew by 2.5% to 4.0 billion euros. Due to a
higher volume of modifications and the overall increase in VIP and
engine business, the cost of materials increased by 5.2% to 2.1
billion euros. The company’s reduced staffing level meant that,
despite the collective agreement pay increase valid from August 2013
and rising expenses for pensions and staff reduction measures,
personnel costs remained largely the same at 1.2 billion euros. At 99
million euros, other depreciation, amortization and impairment losses
also remained largely at the previous year’s levels. Other operating
expenses declined slightly to 610 million euros (- 0.8%) owing mainly
to currency effects.

A restrictive approach to new appointments, especially in
administrative areas, and offers of early retirement for special
groups of employees as well as the closure and sale of companies led
to a reduction in the average number of employees to 19,927 (- 2.2%).

As the most important package of measures in the future Jansen
mentioned the remaining SCORE projects, which will be implemented in
2014 and 2015 and are expected to contribute an additional 350
million euros. “We’re now halfway through the program and have
achieved almost 50 percent of the planned impact on earnings, but
sustaining improvements in efficiency in the long term is more
difficult than achieving initial successes.”