Continuing on growth path: Significant revenue plus in 2018
Lufthansa Technik AG continued on its course for growth in 2018. With revenue at record levels, the company slightly surpassed its results from 2017 despite intensified price pressure and far-reaching investments in digitalization, its international network and personnel.
Sales revenues climbed by more than EUR 500 million, surging from EUR 5.404 billion to EUR 5.918 billion, an increase of 9.5 percent above the previous year's total. The company generated adjusted EBIT of EUR 425 million (previous year: EUR 415 million), an increase of 2 percent. These figures apply to Lufthansa Technik AG and its 21 fully consolidated companies.
Lufthansa Technik thus outperformed the market in 2018. The Americas region produced the highest level of growth with a 20 percent increase in revenue year on year, ahead of the region Europe, Middle East and Africa with a gain of nearly 9 percent. Asia generated modest revenue growth of 3.4 percent.
"Growth of 10 percent, a level that clearly outpaced the market, is a strong performance. We have every right to be satisfied, because we have demonstrated once again that we are the driving force in our industry," said Dr. Johannes Bussmann, the Chairman and CEO of Lufthansa Technik AG.
The important role played by Lufthansa Technik in international aviation is reflected in particular in the number of aircraft the company supports: For the first time, Lufthansa Technik now provides technical services for more than 5,000 aircraft. This figure grew in 2018 by about 600 to a total of 5,131 aircraft, an increase of nearly 13 percent, and amounts to about one-fifth of the commercial aircraft in operation around the world today.
"Every fifth aircraft that takes off and lands around the world is supported by Lufthansa Technik," Bussmann said. "This says more about our success than any key performance indicator, and it especially reflects the growing trust of our customers in the excellence of our workforce. Those are very solid prerequisites for further growth this year."
The company's strong performance was also mirrored by new contracts: During fiscal year 2018, Lufthansa Technik gained 29 additional aircraft operators as customers and signed 576 contracts for new business worth EUR 5 billion.
Investments in digitalization, network and personnel
The aircraft maintenance, repair and overhaul (MRO) industry is undergoing a very dynamic transformation process: Business conditions are changing even as the market is set to grow steadily at an expected rate of at least 5 percent annually. More and more new aircraft types with new technologies, materials, components and engines are entering flight operations as part of a process that is unlike anything seen in decades. At the same time, new actors – the manufacturers of aircraft and components – are joining the growing MRO market.
"The market is both extremely attractive and challenging. For us as the world market leader, this means continuing to develop and, of course, continuing to invest," Bussmann noted.
For this reason, Lufthansa Technik boosted its investments once again last year, from EUR 233 million to EUR 241 million. The focal points of these investments were the development of digital products and services, the expansion of the company's international production networks, partnerships with manufacturers, particularly in the area of engine overhaul, and the hiring of new employees.
The focus of the company's business development is the digitalization of the service range: AVIATAR, an independent and integrated platform for digital offers, has established itself in the marketplace. Many partners and customers from major airline alliances are already working with AVIATAR. Thus, the operators of a significant four-digit number of aircraft meanwhile supported on the platform profit from optimized operating times, reduced consequential costs and more reliable fleet operations. The services offered by AVIATAR include predictive maintenance with integrated technical implementation. Flight operations will be added in the next step as a way of providing airlines with an end-to-end, uniform solution for fleet management, from technical operations ("tech-ops") and ground operations ("ground-ops") to flight operations ("flight-ops"). To ensure competition and guarantee airlines' independence in regard to their data in the long-term, Lufthansa Technik has set up the AVIATION DataHub in March 2019. The stand-alone company offers an independent platform for all data generated by aviation.
"We are the only company in the world that offers an integrated and manufacturer-independent digital platform like AVIATAR, where we can pool our decades of experience in the maintenance of aircraft, components and engines," Bussmann explained. "The establishment of the AVIATION DataHub is another very important step to ensuring this independence and guaranteeing airlines' control of the data of their fleets and the use of this information."
In the area of engine maintenance, Lufthansa Technik moved ahead in 2018 with efforts to forge joint ventures with engine manufacturers. XEOS, a joint production platform with GE Aviation, celebrated its topping-out ceremony in 2018. Beginning in the spring of 2019, it will maintain, repair and overhaul the first large-sized engines from the latest generation of General Electric engines on behalf of their owners. EME Aero, a joint venture with MTU Aero Engines, laid the cornerstone last year for the construction of one of the largest and most modern MRO shops for state-of-the-art geared turbofan engines. This facility is scheduled to go into operation at the end of 2019.
Investments in digitalization and the network were supported in 2018 by a substantial increase in the size of the company's workforce. The headcount of Lufthansa Technik AG and its 21 fully consolidated companies rose by an average of 6 percent during the year, from 21,194 (2017) to 22,537 (2018).
One critically important element of personnel development is the professional training of young people. Across Germany, 122 young employees began their training in 2018 in technical, industrial or commercial areas at the Lufthansa Technik Group. This number will rise to more than 200 on 1 August 2019, when the next training period begins.