After edging closer to pre-crisis recovery levels following robust revenues and earnings levels for last year, Lufthansa Technik (LHT) says it expects a decision related to a partial sale of the company to be made by the middle of this year.
Speaking at its annual press conference broadcast from its Hamburg headquarters on March 7, LHT CEO Soeren Stark said the company expects to decide about a potential sale of part of its business by the middle of 2023 or in the third quarter at the latest. LHT has been the subject of speculation about a possible selloff of a stake for the past two years.
Stark didn’t name what type of investment partner the company would look for but says any decision won’t be influenced by the gaining of proceeds by the group. “We are looking for a second shareholder with complimentary capabilities that has the potential to make us even stronger,” he says.
The German MRO provider published its full-year results today. It revealed earnings of €511 million ($544 million), a 41% year-on-year increase from the €362 million posted in 2021. Revenues increased to €5.6 billion, an increase of 39% from the previous year’s €4 billion.
Factors cited behind the company’s financial uptick were the overall MRO market demand recovery, a restructuring program rolled out during the pandemic, an advantageous U.S. dollar exchange rate and LHT’s strong market position.
The company posted new contracts worth €9.6 billion last year with a total of 706 new contracts signed and 28 new customers gained over the 12-month period. It estimates that the Europe, Middle East, and Africa regions accounted for almost two-thirds of this new business, more than twice as much as the Americas region and around five times as much as Asia-Pacific.
Overall, it is servicing more than 800 customers by the end of 2022 and more than 4,200 aircraft.
Major agreements from the past 12 months cited include component repair contracts with three ultra-low-cost carriers in the Indigo Partners group, under which Lufthansa Technik will service some 1,000 Airbus A320 family aircraft over the next decade.
Contracts with the Lufthansa Group's airlines accounted for roughly one-third of new business last year; two-thirds came from customers outside the group.
Seeing itself from a position of strength, LHT says it plans to grow its operation not just in Europe but also in the Americas and Asia-Pacific regions. It also plans to invest in new staff worldwide this year, including 2,000 employees at its Hamburg base to meet capacity ramp ups and an additional 2,000 people across its global network.
However, Stark acknowledges issues in the global recruitment market and also doesn’t see supply chain challenges easing by the end of this year. “The scale of recovery not only caught us by surprise but many of our suppliers,” says Stark. “This meant they experienced many supply chain disruptions with skilled workers difficult to come by. Bottlenecks will remain this year and likely beyond.”
LHT says the Russia-Ukraine war had an impact on its revenues, with the loss of Russian customers estimated at €240m accounting for 450 Russian aircraft.
Unexpected demand has also occurred from previously declining segments such as Airbus A380 aircraft. The superjumbo was largely parked with many of its operators accelerating retirement plans at the height of the pandemic, however given the rebound in long-haul air travel, airlines have brought the aircraft back into service including LHT’s Lufthansa affiliate.
LHT plans to meet this demand by adding an additional base maintenance line for the A380 at its LHT Philippines operation in Manila, bringing up its total number of lines to three by the second half of 2023.
It is also pressing ahead with a €65 million construction project for a hydraulics workshop in Hamburg, which was suspending during the pandemic but is scheduled for a 2025 completion.
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