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MUNICH (Reuters) - German airline Lufthansa expects its profit to fall slightly this year due to pressure on ticket revenues and a rising fuel bill, it said on Thursday after reporting annual results in line with expectations.
Chief Financial Officer Ulrik Svensson said the year had started well, with unit revenues even improving in Asia compared with last year. But revenues were under pressure in Europe, he said.
Many analysts have expressed concern that European airlines are engaging in a damaging battle for customers, putting more seats onto the market than there is demand for, which will lead to lower profits this year.
Lufthansa has said it would increase capacity by 12 percent this year. Of that, 8 percent is thanks to the takeover of Brussels Airlines and a deal to lease 38 planes and crew from Germany's Air Berlin.
The fuel bill is expected to increase by about 350 million euros ($375.7 million) this year to 5.2 billion euros, and Lufthansa said efforts to reduce costs would not be enough to offset the rising fuel bill and pressure on ticket prices.
It therefore expects 2017 adjusted earnings before interest and tax to be slightly lower than the 1.75 billion euros reported for 2016.
Lufthansa reduced unit costs, not including fuel or currency, by 2.5 percent last year and is targeting a similar figure for this year.
It achieved a major step towards reducing costs with a deal on pay and pensions with pilots' union Vereinigung Cockpit on Wednesday.
($1 = 0.9315 euros)
(Reporting by Victoria Bryan; Editing by Maria Sheahan)
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