The LSG Group delivers decisively on its business plan as a standalone company
Frankfurt, Germany – In 2023, the LSG Group was able to double its financial performance, even as it transitioned to new ownership, setting the stage for a strong start to the new year. In fact, the company’s total financial performance in the past year matched its achievements of the pre-pandemic year 2019, and doubled its results compared in 2022.
This was underlined by a 97 percent customer retention rate in the United States, the company’s largest region. Meanwhile, its EMEA (Europe, Middle East and Africa) region, as well as Latin America, also enjoyed a very strong operational year despite the effects of some currency fluctuations. The Asia-Pacific region experienced a significant post-pandemic resurgence that is reflected in the many opportunities the company is currently exploring. In the course of the year Retail inMotion (RiM) invested in transformative initiatives and structural enhancements, hence reaching full maturity and stability as a mid-size company. The Onboard Retail expert also expanded into the Asia Pacific market, where it set the stage for accelerated expansion.
For the year 2023 as a whole, the LSG Group (LSG Sky Chefs and Retail inMotion) reported a consolidated total revenue of EUR 2,347 billion, surpassing the pre-pandemic figure of the year 2019 (EUR 2,302 billion). This was thanks in large part to its strong performance in the classic airline-catering segment and high inflation protection. As a reflection of that performance, the company’s number of FTEs (full-time employees) stood at 20,950 by the end of the year, an almost 12 percent growth over 2022. An adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of EUR 142.3 million, fell in line with the company’s business plan, which translates into a doubling of the results compared to the previous year.
“We achieved a solid financial performance in 2023 and delivered on our business plan for the second year in a row,” said Group CFO Karin Sonnenmoser. “This is a remarkable accomplishment, which clearly shows our resilience and strong foundation, particularly because the latter part of the year brought so many changes to our company. In 2024, we are working to further grow our results and to secure our cash situation while looking forward to even more improvements from a financial stability and CapEx (capital expenditure) standpoint.”
A transformative trajectory in 2023
During the year, there were several milestones highlighting how the LSG Group pursued its strategic goals during its transitional ownership period. At the international management conference early in the year, Group CEO Erdmann Rauer stated that the strategic focus would remain on the diversification of the business segments, digitalization in all areas, globalization, effectiveness and efficiency.
In line with its sustainability goals in the People dimension (per the UN’s 2030 Agenda for Sustainable Development), LSG Sky Chefs installed Employee Experience Managers at its customer service centers (CSCs) in the U.S. to tackle the important issues of employee retention and satisfaction, a challenge which arose during and after the pandemic.
In April, it was announced that the company would be sold to private equity investor AURELIUS. The sale was closed on October 31, giving the LSG Group a new status as a standalone company independent from the Lufthansa Group. On November 1, a new chapter in its long history began for the LSG Group with the conclusion of the sale.
Innovation and Partnerships in Focus
At the WTCE (World Travel Catering & Onboard Services Expo) in May, the LSG Group showcased its emphasis on hybrid products and services, like its inflight management suite and the new AICA, our consumption analytics tool that was awarded “Catering Innovation of the Year” at the Onboard Hospitality Awards. At those same awards, subsidiary Retail inMotion (RiM) won gold for Best Onboard Beverage and Best Onboard Catering innovation. One other innovative example by RiM is the AutoSync feature developed for increased onboard-retail payment authorization rates. The feature can also support airlines within an offline payment environment. Another example is the Virtual Try On Webpage RiM created for Discover Airlines.
Partnerships also took center stage at the WTCE with the participation of Kaelis and Barilla at the company’s booth and an onsite gathering of the LSG Group’s joint-venture partners from around the world. Later in May, the company unveiled “next,” an internal innovation program designed to accelerate how new customer-centric ideas can come to life.
In June, LSG Sky Chefs North America won the PAX International Award as “Airline Caterer of the Year,” recognizing the company’s high level of excellence in its core area. In partnership with leading customer American Airlines, LSG Sky Chefs unveiled the future of airline catering with the opening of a new state-of-the-art production facility at Dallas-Fort Worth International Airport in May.
Business wins and extensions
In the second half of 2023, LSG Sky Chefs expanded its relationship with important customers and retained several key accounts. New acquisitions included, among others, Qatar Airways and Air Premia in Seoul, South Korea (ICN), Air France in Washington-Dulles (IAD) and IndiGo Airlines in Nairobi, Kenya. As far as retentions is concerned, WestJet was retained in Canada, FedEx in multiple locations in Asia-Pacific, Azul at various stations in Brazil and Emirates and LOT in Toronto, Canada. In the onboard retail area, Retail inMotion secured a milestone two-year contract extension with Ryanair, in addition to acquiring Braathens Regional Airlines, Marabu and Cebu Pacific as new customers. In the food commerce area, convenience-store chain RaceTrac was retained with a contract renewal in Orlando, Florida.
“Even as we were navigating the often-challenging sale process, our people never wavered in their effort to deliver to our customers with the same passion for food, safety and quality that has made us their inflight and food commerce services provider of choice,” said Erdmann Rauer, LSG Group CEO. “Our results for 2023 are a good indicator of the strength of the LSG Group as we transitioned to a new owner and became a standalone company. Through our customer-centric approach and focus on innovation, we will continue to create value through our end-to-end solutions across the travel spectrum. Leveraging the power of our global network and valued partnerships, we will continue to claim a position of leadership in our industry and rise above expectations.”