Eurowings To Become Profitable By 2021

Eurowings will return to profitability by 2021, according to the Lufthansa Group’s CEO, Carsten Spohr. The comment was made as part of the airline’s third-quarter results which were delivered today.

Lufthansa, Eurowings, Profitability
Lufthansa expects Eurowings to return to profitability in 2021. Photo: Eurowings

Earlier today, despite its ongoing cabin crew strike, Lufthansa issued its third-quarter results. Overall, these showed that the group had earnings before interest and taxes of 1.3 billion euros.

However, despite the group making healthy earnings overall, the airline’s low-cost division, Eurowings, is making a loss. Not to be disheartened, Carsten Spohr has said that he expects the airline to return to the black within the next two years.

First signs of success

According to Lufthansa, Eurowings is beginning to show the first signs of success, and as such, the group is constantly pursuing it. This is despite the airline’s own earnings before interest and taxes becoming worse.

In the first nine months of 2019, Eurowings made earnings before interest and taxes of minus 104 million euros. However, in the previous year, this was only minus 98 million euros.

But, looking at the third quarter, the airline’s earnings before interest and taxes increased by 36% over last year. As a result, it sat at 169 million euros. This is up from 122 million from the previous year.

Lufthansa, Eurowings, Profitability
While EBIT is up for Q3, it is down for the year so far compared to last year. Photo: Eurowings

What about the group as a whole?

Elsewhere in the Lufthansa group, the total revenue has increased in the third quarter of 2019. Last year the figure sat at 10 billion euros. However, the figure has increased two percent to 10.2 billion euros this year.

Despite the increase in revenue, earnings before tax and interest actually fell for the group as a whole. The 2018 figure of 1.4 billion euros fell by eight percent to 1.3 billion. This is partly because the group had to spend an additional 171 million euros on fuel in 2019. The airline has attributed the increase to currency fluctuations.

Speaking of the results Carsten Spohr, CEO of the Lufthansa Group, commented,

“At Eurowings the turnaround measures are showing first results; and at Austrian Airlines, Brussels Airlines and Lufthansa Cargo We want to take tangible action to improve our earnings. As Europe’s leading airline group, we are on a sound and stable strategic course.”

Lufthansa, Eurowings, Profitability
Overall, the Lufthansa Group’s revenue for Q3 increased over the previous year. Photo: Lufthansa

A difficult day for Lufthansa

Despite releasing fairly positive earnings before income and taxes, in addition to announcing that Eurowings would return to profitability within two years, Lufthansa hasn’t had the best day. The airline today had to cancel hundreds of flights as cabin crew members of the UFO went on strike.

The Lufthansa cabin crew are participating in a 48-hour strike to try and secure a 1.8% pay increase. Yesterday, the Frankfurt labor court ruled that the strike was not unlawful, despite Lufthansa attempting to secure an injunction to block the action.

Do you think the Lufthansa group will be able to return Eurowings to profitability in 2021? Let us know your thoughts in the comments below!

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Sam Rittler

That A320 is looking baller

Chris

I don’t think that Eurowings will be profitable in 2021.