Course of business

LSG Sky Chefs increases sales

Demand for LSG Sky Chefs catering services was up on the previous year in the full year 2011, despite the political turbulence in North Africa and the Middle East and the earthquakes in New Zealand and Japan. In parallel with the general economy, growth slowed in the second half of the year, however. This also affected demand in the premium segment. Nonetheless, for the full year 2011, LSG Sky Chefs’ revenue in local currency was still higher than the previous year’s in all regions.

Catering revenue by region (pie chart)

In the reporting period the great majority of airline catering contracts were renewed and the company won some important new customers. New contracts got off to a successful start with British Midland in the UK and Onur Air in Turkey. Furthermore, LSG Sky Chefs successfully renewed and extended business relationships with existing customers. These include United Airlines at 24 sites worldwide, Air France-KLM, TAM in South America, Air Baltics in Riga, All Nippon Airways in China, North America and Germany, and Germanwings and Thai Airways in Germany. Qatar Airways, Transaero and Gulf Air are being supplied with equipment solutions for the first time.

In Zurich LSG Sky Chefs has merged its operations in a joint venture with First Catering Production AG, a globally active airline catering company. The joint venture commenced operations in May. In addition, the company signed a letter of intent with Alpha Flight Group to establish a joint venture dedicated solely to the British market. The effective date and further timetable for the joint venture depend on the approval of the relevant competition authorities, which was still outstanding at the end of the year.

At the third largest airport in the world, in Chicago, LSG Sky Chefs has been represented with its own facilities again since May 2011. The joint venture in Nanjing in existence since 1998 was renewed before schedule until 2026. The start of construction work for a catering facility in Luanda due to open in summer 2012 was an important milestone in the company’s strategic expansion in Africa.

Realignment results in greater flexibility

In mid-year the airline catering activities in Germany were realigned and the former LSG Sky Chefs Deutschland GmbH was split into an administration company and twelve operating companies. Setting up individual German GmbH companies enabled the individual sites to adjust faster and more flexibly to their specific market conditions and thereby to improve competitiveness and generate growth.

In adjoining markets – catering for trains, schools and clinics and deliveries to retailers – LSG Sky Chefs was also able to meet its targets and expand its operations in all regions. A new contract was acquired in train services, which began in December with supplies for the daily Veolia-Trenitalia night train between Paris and Venice. Catering for schools in Hong Kong, which has been a success for many years, was ramped up to over 35,000 meals a day for 82 schools. Initial pilot projects in school catering are underway in India and Sweden as well. In the area of clinic catering, supplies to the Schön-Klinik in Hamburg began as part of the partnership with the service specialist Ahr Service. To reinforce its retail operations in the USA, LSG Sky Chefs acquired the retail supplier Constance Food Group, dba Norris Food Services, New York, in autumn.

The service quality of LSG Sky Chefs was again acknowledged and rewarded by customers and industry associations. LSG Sky Chefs continues to differentiate itself by means of innovation and environmental awareness. The new lightweight trolley Quantum, which offers a weight saving of up to 40 per cent compared with conventional galley carts and won an award in 2010 as the most innovative cabin product, is increasingly being used by major customers.

The company-wide initiatives launched in prior years to standardise processes and increase performance in purchasing, production and sales were continued successfully. In purchasing, the effects of severe price inflation in the areas of food and energy could be limited. The new LSG Sky Chefs production system was implemented in the 25 largest plants: it ensures very high service quality, efficient processes and dependable deliveries. Process standardisation in sales has now been rolled out throughout the company: it creates global transparency, comparability and added value for customers.

Upgradeplus has met its targets

The company-wide programme Upgradeplus that was launched in 2009 has met its target for year-end 2011 of cutting costs by EUR 200m compared with 2008. The project management systems introduced as part of the programme have been incorporated into everyday routines in all regions. This enabled LSG Sky Chefs to improve its competitiveness sustainably as well.

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