Lufthansa Forecasts Earnings Slump in Third Quarter as Costs Rise

Reuters2024-07-31

German flag carrier Lufthansa expects lower earnings in the third quarter as yields slump and unit costs increase, the company said on Wednesday.

Airfares around Europe and Asia have started to plateau or fall, signalling that a prolonged post-COVID travel boom is waning and delivering a setback for airlines struggling with higher costs and limited aircraft availability.

In the third quarter, Lufthansa expects yields to be lower by a single-digit percentage compared with 2023 levels, while unit costs are expected to rise by a similar magnitude, according to a company statement.

Overall, it expects third-quarter adjusted earnings before interest and taxes (EBIT) to fall short of the prior-year level of 1.5 billion euros ($1.62 billion), due to challenges at Lufthansa Airlines.

Lufthansa cut its profit target for the second time this year in July.

Last week, Air France-KLM missed its profit forecast on higher costs that also plagued its first quarter results, and falling profit at Ryanair sounded further alarm bells.

Lufthansa shares are down around 25% over the last six months as it continues to struggle to recover its balance sheet.

($1 = 0.9239 euros)

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