LSG Sky Chefs maintains leading market position

Neu-Isenburg, Germany — In 2009, LSG Sky Chefs was able to maintain its competitive position in the market despite the sharp fall in demand for in-flight products and services. Consolidated revenues decreased by 9.6 percent to 2,102 million EUR, largely due to sharp capacity reductions by airlines, passenger migration from premium classes to economy and the loss of SAS as a major customer. The company’s operating result, however, increased by 2.9 percent and amounted to 72 million EUR. While the drop in revenues certainly had a strong negative impact on this result, it nevertheless benefited from positive one-time occurrences and reflects the success of the company’s ongoing improvement initiatives and cost-savings programs.

“In 2009, we had our share of tough challenges, but we managed them well,” said CEO Walter Gehl. “This is the first time in which demand for our services declined in basically all of our 200 worldwide locations. Our striving for increased flexibility and our focus on quality and customer service have clearly paid off.”

Within the framework of its limited expansion strategy, LSG Sky Chefs successfully entered new markets in Uganda, Nigeria and Angola and reinforced its market position in Egypt and Brazil. At the same time, the company extended its service portfolio by securing new partnerships, such as Oakfield Farms in the U.S. and an agreement with Norduyn in Canada, and by sharpening its focus on innovation and environmental awareness.

For the financial year 2010, LSG Sky Chefs expects global demand for catering services to stagnate — but with regional variations. Faced with this situation, the company will continue to pursue a two-year program aimed at increasing competitiveness by securing a sustainable structure and generating profitable revenue growth. It will also negotiate new wage agreements in its two major markets (Germany and the United States), which will be crucial in maintaining LSG Sky Chefs’ competitiveness and market leadership.

“This year we will be confronted with the same weak market we have been dealing with so far, and we do not expect to get back to the level of demand we had just a couple of years ago,” said the company’s CEO.  “In addition to our focus on customer retention and new business wins by delivering reliable, high-quality and innovative services, we will also explore growth opportunities in promising markets like Eastern Europe, the Middle East and Africa.”

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