The Lufthansa Group (LH) has entered into an agreement for the sale and leaseback of twelve short-haul (A320s) aircraft, aligning with the Group’s strategy The post Lufthansa New Agreement for Sale and Leaseback of 12 A320s appeared first on...
COLOGNE- The Lufthansa Group (LH) has entered into an agreement for the sale and leaseback of twelve short-haul (A320s) aircraft, aligning with the Group’s strategy to finance new aircraft investments through a combination of cash, Japanese Operating Leases (JOLCOs), and operating leases.
This approach supports the modernization of the Lufthansa Group Airlines’ fleet, aiming to achieve lower fuel consumption, reduced emissions, and improved ex-fuel unit costs with the introduction of new and modern aircraft.
Photo: By tjdarmstadt – IMG_9956.jpg, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=61530003
Lufthansa Sale and Leaseback of A320s
The transactions involve two counterparties, Clover Aviation Capital and the long-term business partner BBAM (Babcock & Brown Aircraft Management).
The deal encompasses the sale and leaseback of twelve Airbus A320 family aircraft, which Lufthansa Airlines, Lufthansa CityLine, and Eurowings currently operate.
The aircraft, up to two years old, were sold at favorable commercial terms, resulting in proceeds of approximately EUR 600 million in the fourth quarter of 2023.
The leaseback agreement spans 72 months, and the resulting lease obligation, recognized as debt under IFRS 16, amounts to around EUR 200 million. A book gain of approximately EUR 100 million arising from the sale will be included in EBIT but not in Adjusted EBIT.
This transaction was already factored into the Lufthansa Group’s financial outlook, which anticipates net capex to range between EUR 2.5 billion and EUR 3 billion in 2023.
Photo: By Lasse Fuss – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=18058671
Strong Q3 Results
In the third quarter (Q3), all passenger airlines within the Lufthansa Group reported substantial year-on-year growth in their results.
Together, their Adjusted EBIT for the quarter totaled EUR 1.4 billion, marking an impressive 91 percent improvement compared to the same period in the previous year when it was EUR 709 million.
This remarkable increase can be primarily attributed to a combination of robust demand, increased capacity offerings, and consistently high yields. Yields, surpassing the 2019 third-quarter levels by 25 percent, reached an all-time high.
Furthermore, there was sustained strong demand for leisure travel during the third quarter, particularly in the premium travel segment.
During the third quarter, the total capacity of the Lufthansa Group’s passenger airlines increased by 13 percent when compared to the same period in the previous year. This capacity equated to 88 percent of the pre-crisis 2019 level.
Impressively, more than 86 percent of the available seats were sold, resulting in a seat load factor that remained largely consistent with the previous year.
In the third quarter of 2023, the Lufthansa Group’s airlines saw a substantial increase in the number of customers choosing to travel with them compared to the previous year.
Collectively, these airlines warmly welcomed over 38 million travelers during the period from July to September, a notable rise from the 33 million passengers in the previous year.
Strong demand was observed across all traffic regions, and there was a noticeable trend of an increasingly international customer base for the Lufthansa Group. In this year, more than 70 percent of all passengers commenced their journeys from locations outside Germany.
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