Lufthansa Technik AG, headquartered in Hamburg, continued its track record for international growth in 2016 and produced a good result with significantly more investment. The increase in revenue with non-group companies overcompensated the decline in internal orders.
Sales revenue climbed by 45 million euros from 5.099 billion euros to 5.144 billion euros. The company achieved earnings before interest and tax (adjusted EBIT) of 411.3 million euros (previous year: 454.4 million euros). These figures from Lufthansa Technik AG and 22 fully consolidated companies were presented at a press conference today.
“In 2016, we have cemented our position as the leading provider in our industry,” said the Chairman of the Executive Board of Lufthansa Technik AG, Dr. Johannes Bussmann, at the announcement of the annual result in Hamburg. “At the same time, we were able to make important preparations for future growth.”
“Lufthansa Technik is commercially very stable. In particular outside the Lufthansa Group, Lufthansa Technik has continued its course of growth, and it has done so in a highly profitable way,” says Constanze Hufenbecher, Chief Financial Officer of Lufthansa Technik. “In view of the competition and price pressure, this is a very pleasing result.”
Business with customers outside the Lufthansa Group grew disproportionately. External revenue from outside the Group grew by eight percent to 3.5 billion euros.
Revenue from group companies fell significantly, declining 11.7 percent to 1.6 billion euros, because of the finalization of the modification program for the Lufthansa long-haul fleet.
Revenue grew disproportionately in the growth regions of Asia and the USA. The substantial growth in revenue in the American market that was seen in 2015 continued unabated in 2016, with growth of 14 percent and revenue of around 900 million euros. In Asia, Lufthansa Technik achieved even higher growth of 23 percent. With revenue now at around 600 million euros, this market is rapidly gaining in importance for Lufthansa Technik.
“This development demonstrates that our internationalization strategy is working,” says Constanze Hufenbecher. “This encourages us to continue along the path we have chosen.”
More than 4,000 aircraft under contract for first time
For the first time, the number of aircraft covered by support contracts with the company has surpassed the 4,000 mark; with a growth rate of twelve percent, a new record of more than 4,100 aircraft has been set.
In 2016, Lufthansa Technik AG acquired 42 new customers (previous year: 27) and concluded 456 new contracts (previous year: 375), with a revenue volume for 2016 and subsequent years totalling 5.7 billion euros (previous year: 3.1).
Important contracts were concluded for new aircraft models such as the Airbus A350. “In 2016, following on from Finnair, we concluded long-term contracts for component supply with China Airlines and Ethiopian Airlines. This makes us the leading provider for this forward-looking model,” emphasized Dr. Johannes Bussmann.
Lufthansa Technik also won more contracts in the low-cost segment. Together with easyJet, the company is operating a maintenance hangar at London Gatwick, supporting the 55 aircraft stationed there. Beyond this, Lufthansa Technik Malta will carry out some 100 aircraft overhauls for easyJet over the coming five years. The close partnership with WizzAir was expanded in 2016. The A320neo and A321neo aircraft, new to the fleet, will also be supported by Lufthansa Technik.
Internationalization with new organization
Lufthansa Technik will push ahead with the expansion of its international presence and the regionalization of its activities in 2017. After the successful implementation of regional sales structures, the next major step along the pathway of internationalization will take place in April. Aircraft Overhaul in Manila will be positioned to serve the entire region. Component Services will acquire a second mainstay in addition to Hamburg, with an Asian base in Hong Kong. The leadership of Landing Gear business unit will be moved from Hamburg to London.
With the massive expansion of its global logistics network, Lufthansa Technik has taken further decisive steps along the road to internationalization of the group. New warehouses in London, Hong Kong, the USA, Düsseldorf, and Munich along with the launch of two companies, Lufthansa Technik Component Services Asia Pacific and Lufthansa Technik Middle East, improve the global supply of components.
“This is a major step as we transform this globally active Hamburg company into an international corporation with strong roots in Hamburg,” says Bussmann.
Lufthansa Technik secured long-term access to servicing essential future engine models in 2016, with new cooperative agreements. Hamburg will be the center for the new LEAP motor, making it the home of overhaul for one of the most important engines in the civil aviation industry. With the XEOS joint venture, the company has successfully entered the overhaul market for the big new GE engines. A strategic partnership with Pratt & Whitney has brought Lufthansa Technik into the service network for the geared turbofan.
At the end of February, an agreement was signed with MTU Aero Engines for the planned development of a joint engine workshop. N3 Engine Overhaul Services, the joint venture with Rolls Royce in Arnstadt, now also supports the Airbus A350 engines.
Lufthansa Technik invested more than 216 million euros in development to secure its own future, some 40 percent more than in 2015. Major areas of focus were innovation and product development, new technologies, mastering new materials, the automation of repair processes, and digitalization. The company established its new “Digital Fleet Solutions” division in Hamburg. Last year also saw expenditure of around 200 million euros to expand the material pool.
“The changing MRO market presents opportunities that we want to exploit early with new business models so that we can play a decisive role in shaping the industry,” emphasized Bussmann.