Davy Research

Lufthansa

Good 2016 results at €1,752m; adjusted 2017 EBIT expected just slightly below 2016; raising price target to €16
Airlines & Other Transport
Lufthansa

DAVY VIEW

Lufthansa has reported strong 2016 numbers with adjusted EBIT of €1,752m (Davy €1,699m, consensus €1,724m), broadly in line with guidance despite €100m in strike costs in Q4. Guidance for 2017 is for adjusted EBIT to be slightly below the previous year (Davy €1,496m, consensus €1,495m). Lufthansa is guiding “less negative” RASK than in 2016 (from “clearly negative” in January 2017), pointing to a rebound of inbound long-haul leisure demand, especially from Asia and North America, and an improvement in long-term bookings, particularly North Atlantic. As we pointed out in our report ‘An inflection point for yields’ (issued January 27th), an improvement in the pricing environment, catalysts for labour agreements (the announcement of a non-binding agreement with the VC pilot union yesterday was a major positive) and improving sentiment pointed to Lufthansa moving strategically in the right direction. We are likely to move up our adjusted EBIT by c.10%. We remain ‘Outperform’ and are raising our price target to €16 from €15. Conference call at 09:15 CET at +44 203 059 8128 (UK) and +1 631 302 6547 (US).

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  • RATINGS AND PRICE CORRECT AT TIME OF ISSUE


  • Lufthansa

    Closing Price: 1442c

  • RATING 27/01/17

  • PREVIOUS RATING 16/10/15

    Neutral

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