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BUSINESS

Lifted by cheap fuel, Lufthansa triples profit

German airline Lufthansa, still reeling from the crash of one of its Germanwings planes in March over the French Alps, said on Thursday it tripled net profit in the second quarter, helped by cheap fuel.

Lifted by cheap fuel, Lufthansa triples profit
Photo: DPA

The company posted “solid results” in the April-to-June period, although earnings “were strongly impacted by external effects”, chief financial officer Simone Menne told a telephone conference.

Net profit soared to €529 million ($580 million) during the second quarter, up from €173 million one year ago.

The report beat the expectations of analysts polled by financial services company Factset, whose average forecast was €279 million.

Among the fortuitous factors for the company were low fuel prices and a rise in interest rates which automatically eased pressure on the airline to top up guaranteed pension levels.

Such effects outweighed the weakness of the euro against the US dollar, which put pressure on earnings, costing €158 million during the first half.

Turnover climbed by nearly nine percent to €8.4 billion during the second quarter despite a decline in per-passenger income of nearly six percent due to ferocious competition in the sector driving down prices.

During the first half, when the airline was hit by crippling pilot strikes which cost €100 million, net profit reached €954 million compared to a net loss of €79 million during the same period in 2014.

Menne said the second half would be “more demanding”.

“The pressure on income per passenger will continue and we will no longer have some of the positive effects seen in the first half,” she said.

Lufthansa confirmed its forecast of adjusted earnings before interest and taxes for the year of more than €1.5 billion.

The airline has been in the headlines constantly over the Germanwings crash in the French Alps on March 24th that killed 150 people, which has been blamed on a suicidal co-pilot.

Lufthansa was forced this month to defend its treatment of families of victims, saying a settlement offer it made had gone “well beyond” what was required by law.

Relatives of German victims have turned down the parent company's compensation offer and accused it of ignoring their suffering.

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ENVIRONMENT

Sweden’s SSAB to build €4.5bn green steel plant in Luleå 

The Swedish steel giant SSAB has announced plans to build a new steel plant in Luleå for 52 billion kronor (€4.5 billion), with the new plant expected to produce 2.5 million tons of steel a year from 2028.

Sweden's SSAB to build €4.5bn green steel plant in Luleå 

“The transformation of Luleå is a major step on our journey to fossil-free steel production,” the company’s chief executive, Martin Lindqvist, said in a press release. “We will remove seven percent of Sweden’s carbon dioxide emissions, strengthen our competitiveness and secure jobs with the most cost-effective and sustainable sheet metal production in Europe.”

The new mini-mill, which is expected to start production at the end of 2028 and to hit full capacity in 2029, will include two electric arc furnaces, advanced secondary metallurgy, a direct strip rolling mill to produce SSABs specialty products, and a cold rolling complex to develop premium products for the transport industry.

It will be fed partly from hydrogen reduced iron ore produced at the HYBRIT joint venture in Gälliväre and partly with scrap steel. The company hopes to receive its environemntal permits by the end of 2024.

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The announcement comes just one week after SSAB revealed that it was seeking $500m in funding from the US government to develop a second HYBRIT manufacturing facility, using green hydrogen instead of fossil fuels to produce direct reduced iron and steel.

The company said it also hoped to expand capacity at SSAB’s steel mill in Montpelier, Iowa. 

The two new investment announcements strengthen the company’s claim to be the global pioneer in fossil-free steel.

It produced the world’s first sponge iron made with hydrogen instead of coke at its Hybrit pilot plant in Luleå in 2021. Gälliväre was chosen that same year as the site for the world’s first industrial scale plant using the technology. 

In 2023, SSAB announced it would transform its steel mill in Oxelösund to fossil-free production.

The company’s Raahe mill in Finland, which currently has new most advanced equipment, will be the last of the company’s big plants to shift away from blast furnaces. 

The steel industry currently produces 7 percent of the world’s carbon dioxide emissions, and shifting to hydrogen reduced steel and closing blast furnaces will reduce Sweden’s carbon emissions by 10 per cent and Finland’s by 7 per cent.

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