LUFTHANSA warned of a fall in third-quarter earnings on Wednesday (Jul 31) as the German airlines group grapples with higher wage costs and a squeeze on ticket prices.
Airfares around Europe and Asia have started to plateau or fall amid signs the post-Covid travel boom may be starting to lose steam just as many airlines are ramping up flights.
Ryanair, Europe’s biggest airline by passenger numbers, and Air France-KLM reported plunging profits earlier this month, although easyJet fared better.
Lufthansa said it expected third-quarter yields – a measure of flight profitability – to fall by a single-digit percentage from 2023 levels, while unit costs are seen rising by a similar amount.
Chief executive Carsten Spohr said demand had remained strong, but that “market-wide capacity growth intensified price pressure for the passenger airlines, causing yields to fall.”
Delays in aircraft deliveries are also disrupting fleet management and driving up repair costs for older planes, while wages have risen for German staff after strikes that cost the group 100 million euros (S$144.9 million) in the second quarter.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Overall, Lufthansa forecast third-quarter adjusted earnings before interest and taxes (Ebit) below the previous year’s 1.5 billion euros, due to challenges at its main-brand passenger business Lufthansa Airlines.
Shares in Lufthansa, which had already cut its full-year profit target earlier this month for the second time this year, were little changed at 0735 GMT. The stock has fallen around 23 per cent over the last six months.
For the second quarter, Lufthansa reported a group net result of 469 million euros, down almost half on the same period last year.
Spohr said a restructuring programme could help to turn around the group’s fortunes, with a focus on modernisation. REUTERS
