Operating expenses

Operating expenses totalled EUR 17.5bn and were 12.6 per cent up on the year. This was primarily due to the increase of EUR 1.6bn in the cost of materials and services.

The cost of materials and services reached EUR 11.1bn and now accounts for 63.4 per cent of total operating expenses (previous year: 60.9 per cent). The increase in the cost of materials and services by EUR 1.6bn stemmed mainly from fuel expenses, which went up by 26.1 per cent to EUR 4.1bn. Adjusted for the amortisation of fuel surcharges, fuel expenses rose by 25.7 per cent. Of the adjusted rise in costs, 8.0 per cent was due to higher volumes, while 24.5 per cent stemmed from higher fuel prices in US dollars (including the hedging result). On average over the year USD exchange rate movements reduced costs by a minimal amount. Without the positive hedging result of EUR 551m fuel costs would have been even higher.

Costs of services purchased also climbed steeply year on year (+12.3 per cent) to EUR 6.9bn. Fees and charges at EUR 3.1bn still constitute the largest expense item under services purchased. As both the number of passengers and prices were higher, air traffic control charges rose by 10.8 per cent, landing fees by 11.8 per cent and handling charges by 5.2 per cent. Passenger fees went up by 55.4 per cent to EUR 1.1bn, not least due to the introduction of the air traffic tax. Overall fees and charges went up by 21.1 per cent. Costs for purchased MRO services were roughly unchanged compared with the previous year at EUR 1.4bn. Charter expenses, largely payable to the regional partners as part of the Lufthansa Regional concept, rose just slightly year on year by 2.4 per cent to EUR 826m. By contrast, expenses for operating leases again went up sharply, by 44.7 per cent to EUR 462m. This was due to the aircraft financed by means of various sale-and-lease-back models in the financial year.

In financial year 2011 Lufthansa’s staff costs totalled EUR 2.7bn, which was 3.8 per cent up on the year. With average annual staff numbers increased by 5.3 per cent (previous year: –0.3 per cent), wage and salary costs rose by 3.6 per cent. Social security contributions also increased by 1.1 per cent to EUR 279m. Expenses for retirement benefits went up by 7.5 per cent to EUR 333m.

Depreciation and amortisation sank by EUR 24m or 4.7 per cent to EUR 489m in the 2011 financial year. The decline was due to the 4 Cessnas sold during the financial year and the 22 Airbus A340-300s involved in sale-and-lease-back transactions.

Other operating expenses totalled EUR 3.2bn and were 7.9 per cent or EUR 237m up on the year. The main reason was the addition to the provision for impending losses for the upcoming disposal of bmi and currency-related losses on the transfer of USD advance payments for three Airbus A380s to Lufthansa Malta Aircraft Leasing Ltd. The increase was partly offset by lower currency losses from changes in exchange rates between origination and realisation and the rates applied at the reporting date as well as lower sales commissions.

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