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Germanwings*


 

 

British Midland tail fin (graphics)

 

 

2011

2010

Change
in %

*

Further information on Germanwings can be found at www.germanwings.com.

Revenue

€m

687

630

9.0

Operating result

€m

–52

–39

–33.3

EBITDA

€m

–15

–9

–66.7

Passengers carried

thousands

7,522

7,730

–2.7

Employees as of 31.12.

number

1,274

1,272

0.2

Focus on the customer

Germanwings understands itself as the quality carrier among the low-cost airlines. With a fleet of 30 Airbus A319s, Germanwings connects the German locations of Cologne/Bonn, Stuttgart, Hanover, Berlin and Dortmund to a total of 75 destinations in Europe and beyond.

Since the company was founded in 2002 the core of its operations has been centred on Cologne/Bonn airport. With 71 destinations and a market share of over 40 per cent, Germanwings was the market leader here by far in the reporting year. Stuttgart is home to seven Germanwings aircraft, which link one of Germany’s leading economic regions to 43 destinations. Three Germanwings aircraft are stationed at the base in Hanover, opened in 2010. A further three aircraft in Berlin-Schönefeld and one in Dortmund complete the offer for flights to and from Germany.

After strong capacity growth in the previous year, the additional expense caused by the introduction of the air traffic tax meant that Germanwings concentrated on consolidating and optimising its route network in 2011. Germanwings therefore abandoned unprofitable routes such as Cologne-Madrid and Stuttgart-Madrid. In parallel, frequencies were increased on the Cologne-Berlin route to make it more attractive to business travellers. Leisure travel capacity was extended with additional destinations in Italy (Pisa, Naples, Bari, Cagliari and Catania). The higher load factor combined with reduced capacity confirms Germanwings in its decision to press on with the optimisation of the route network in a difficult market environment.

At the same time, Germanwings also further improved its in-flight product and boosted revenue as a result. Since the beginning of June, customers travelling in the first ten rows of any aircraft in the fleet can enjoy a larger seat pitch. Passengers can either book this additional leg-room by choosing the “Best Seat” option or as part of the “Best Price” package. The “Best Price” package also includes one item of luggage, a snack and a drink. It is particularly popular with business travellers.

Since January 2011, it has been possible to book Germanwings flights in combination with Lufthansa via global distribution systems. The successive integration of Germanwings into Lufthansa’s corporate benefits programme has enabled the range of sales channels to be extended even further.

Air traffic tax weighs on operating result

The introduction of ticket taxes for departures from Germany and Austria on 1 January and 1 April 2011 respectively represents an increasing and lasting imposition on air traffic as a means of transport from 2011. Altogether, Germanwings remitted 5.4 per cent of its revenue to the appropriate federal authorities. The higher oil price also inflated the cost base. Over the course of the year Germanwings was increasingly able to pass on these exogenous effects to the market, so that average yields rose sharply despite the competitive environment. Passenger numbers sank by 2.7 per cent to 7.5 million while the passenger load factor went up by 1 percentage point to 78.2 per cent. Revenue rose to EUR 687m (+9.0 per cent). Overall, however, for the financial year 2011 Germanwings reported a negative operating result of EUR –52m (previous year: EUR –39m) due to the effects mentioned above.

Cooperation between Germanwings and Lufthansa is intensified

Increasing fuel prices, the start of emissions trading and perennial fears of recession in Europe again present Germanwings with serious challenges in 2012. The company is nevertheless striving to improve its revenue and operating result in 2012. The initiatives taken in 2011 will make a major contribution to achieving this goal.

The cooperation with Lufthansa focuses on additional customer value and will release significant earnings potential. Reciprocal marketing on the Germanwings and Lufthansa websites as well as the introduction of status miles on flights with Germanwings enhance the position of the Lufthansa Group in decentralised European traffic. The ensuing synergies further improve the unit cost position at Germanwings, which is essentially competitive already.

In this context, the Lufthansa group airlines’ route networks from Stuttgart are to be more closely coordinated starting with the summer flight timetable 2012. All European destinations will then be served by Germanwings for example. In organisational terms, the management functions responsible for decentralised European traffic at Lufthansa Passenger Airlines and the management board of Germanwings are to work together more closely.

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