Lufthansa Technik profits hit by redundancy costs

Redundancy costs of $5.1 million (€3.76 million) last year contributed to pre-tax profits at a Lufthansa-owned aircraft overhaul and leasing group in Ireland falling 37 per cent to $21.9 million.

Accounts for Lufthansa Technik Airmotive Ireland Holdings Ltd show a sharp decrease in profits after revenues reduced by 14 per cent from $372.8 million to $321.4 million in the 12 months to the end of last December.

Very depressed
According to the directors' report: "The aviation maintenance, repair and overhaul (MRO) was very depressed in 2012 which resulted in a reduction in group turnover of 13.8 per cent and a decline in group profit before tax of 37.3 per cent".

The directors say the slowdown in the engine overhaul sector last year resulted in management offering a restructuring scheme to staff with 55 availing of voluntary redundancy at a cost of $5.1 million. After the redundancies the numbers employed at the group’s Shannon and Dublin bases went from 1,205 to 1,147 last year.

The group's operating profit last year fell 29 per cent from $42.2 million to $29.9 million. Interest payments and other finance charges of $8 million reduced group to $21.9 million.

Accumulated profits
At the end of last December, the firm had $165 million in accumulated profits. Its shareholder funds totalled $298.9 million. The operating profit was achieved after factoring in the non-cash costs of $26 million in depreciation and a $12.38 million writedown in the value of aircraft-related components. It recorded an actuarial loss of $37.34 million on its pension scheme last year that followed an actuarial loss of $9.5 million.The report states: "The company continued to be profitable in 2012, assisted by a strong focus on cost control."

The directors state that the company’s leasing sector “continued to grow in 2012, and as in 2011, contributed the bulk of the group’s profit for the year”.