Inflight catering giant, LSG Group, has reported it made a 92% hike in revenues in the first half of 2022, driven by positive aviation business development in all regions of the globe – especially in North America and Latin America. The increase amounted to EUR 410 million, bringing total revenue to EUR 857 million –92% more than last year’s revenue figure of EUR 447 million. This figure means that the LSG Group has now reached 77% of its pre-pandemic revenue level (2019’s figure was EUR 1,113.7 million).
In addition to benefitting from the recovery of the aviation sector from the pandemic, with surging demand for inflight catering, LSG’s balance sheet has also In the first six months, the company signed new contracts, renewed existing ones and entered into new partnerships.
“Our industry continues to move through challenging economic times,” said Wilken Bormann, CFO of LSG Group of the results. “The current pandemic is compounded by supply chain disruptions, flight cancellations due to capacity constraints and high fuel and inflation costs in much of the world. The LSG Group is nevertheless recording stable growth figures and is successfully maintaining its strategic realignment and strict cost management.”
The growth in revenue is reflected in the company’s number of employees at 30 June 2022, which was 18,659 (previous year: 15,288, up 22%). Adjusted EBIT decreased to EUR 13 million in the first half of 2022 (previous year: EUR 19 million) due to the elimination of grants under the US Cares Act. LSG says that, excluding the grants, adjusted EBIT would have exceeded the previous year’s figure.
Partnerships and innovations
In the first two quarters of the year, LSG Group focused on implementing its strategic realignment strategy, and in this context entered into partnerships with NotCo (a Chilean plant-based food-tech company), Kaelis (a provider of onboard products and services), and Cuisine Solutions (a US-based company that specialises in sous-vide cookery). The aim of these partnerships is to expand LSG’s offering in the areas of food technology and sustainable food and equipment solutions.
At the same time, the company launched its Next innovation programme created to encourage employees to contribute new ideas for the company. For example, at WTCE (World Travel Catering & Onboard Services Expo) in June, the largest airline catering trade fair, the company presented innovations such as Consumption Analytics, the Inflight Management Suite, and developments and product innovations in inflight sales, such as pre-order and pre-select technology.
“We are seeing more and more how our strategy is becoming a reality and is creating more growth and new perspectives in all areas of the company. The excellent feedback and interest from our customers at the WTCE encourages us and spurs us on to act even faster and more innovatively,” stated LSG Group CEO, Erdmann Rauer. “Looking back, we have achieved a lot in the past six months and demonstrated market leadership, despite all the market volatility. We can be proud of this and draw the necessary energy for the months ahead. We are on the right track, I am sure of that.”
New contracts and contract extensions
In its core business, airline catering company LSG Sky Chefs renewed major contracts with international airlines and signed new ones in the first half-year. These contracts included Delta Air Lines (23 US locations, 2 hubs, 5 international locations), Air France/KLM (7 Latin American locations), Condor (11 new US locations), as well as Vietnam Airlines in Los Angeles, Saudi Arabian Airlines in Bangkok and Incheon, Thai Air Asia X in Thailand, Greater Bay Airlines in Hong Kong, UPS Cargo-Catering in Anchorage, and Turkish Airlines in Seattle and Dulles.
Retail inMotion, LSG Group’s onboard retail division, also signed contracts in the first six months with Spirit Airlines (a five-year extension), Eurowings Discover (several new US locations, last mile through LSG Sky Chefs), easyJet (onboard retail technology, last mile through Dnata) and Greater Bay Airlines in Hong Kong (onboard retail management). The company also won four onboard hospitality awards and developed and implemented Condor’s new home delivery webshop.
New locations and contracts in food commerce
Food commerce (business with retailers and home delivery services) is the second pillar of the LSG Group’s business that gained importance and revenue growth during the pandemic. The Ghost Kitchen network was expanded by four new locations in the reporting period (Sao Paulo/Brazil, Denver and Chicago/USA, Helsinki/Finland). The catering operation in Chile now supplies all baked goods to one of the largest coffee house chains. The operation in Pittsburgh/USA won a fifth season as a new customer.
The LSG Group’s sustainability strategy, based on the three pillars of ‘People, Planet and Prosperity’, was further developed with regional working groups, creating definite projects with measurable goals. Retail inMotion launched its Prism sustainability strategy, which is intended to have a long-term impact across all IT solutions and divisions. All initiatives are brought together under the umbrella of LSG’s overarching sustainability strategy, with the aim of it being at the core of all corporate activities.