ATW Daily News

Lufthansa Technik revenue outpaces global MRO market

Monday March 12, 2007

Citing strict cost control and increased revenues mainly from customers outside Lufthansa Group, Lufthansa Technik Group reported net income of €153.1 million ($167.6 million) in 2006, a healthy 17.7% increase compared to the €127.6 million earned in 2005.

Revenues rose 9.4% to €3.4 billion, with revenues from group airlines ahead 5.1% to €1.4 billion, representing 40% of total sales. Revenues generated from external customers grew 12.5% and represented 60% of sales, up from 58.3% in 2005.

"In view of rising passenger numbers and growing fleets, but also with regard to continuing price pressure from the airlines, Lufthansa Technik was very successful in 2006," Executive Board Chairman August Wilhelm Henningsen commented. "We were able to grow more rapidly than the international market [which showed growth of 7%] and we have further consolidated our position in the MRO business."

Henningsen said he expects the share of business generated from external customers to continue to rise. "Hopefully the share of Lufthansa will go further down," he told ATWOnline in Hamburg. "In absolute terms their revenue with us goes up but in relative terms it does decrease. This is a positive signal that our position in the global market is growing. However, I anticipate Lufthansa [Group carriers] will remain our largest customers."

LHT added 48 new customers in 2006, bringing its worldwide customer base to 583, and added 406 new contracts worth €1.9 billion. The number of aircraft serviced rose 19.6% to 1,278.

Chief Executive-Finance Peter Jansen noted that the company's cost reduction and efficiency program Perspektiven Technik, launched in 2004, "slightly exceeded" its target as it achieved savings of €243 million.

Jansen told this website he sees further consolidation in the MRO market but recognizes that it continues to be very fragmented. "We are the largest player and have a 14% to 15% share," he pointed out. While not excluding an acquisition, he said LHT "intends to grow step by step. . .We are very conservative as regards major acquisitions," which he defined as costing more than €250 million.

by Cathy Buyck

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