Lufthansa forecasts lower earnings in Q3 as yields slump, costs rise

German flagship carrier Lufthansa expects lower earnings in the third quarter as yields slump and unit costs increase, the company said on Wednesday, adding to warning signs for European airlines amid flattening demand and aircraft delivery snags.
 

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 ($1.6 billion), due to challenges at its main-brand passenger business Lufthansa Airlines.
 

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

Spiralling coat
 

European airlines have already suffered a disappointing first quarter, with their woes around spiralling costs and struggling yields set to define the second quarter as well.
 

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 per cent over the last six months as it continues to struggle to recover its balance sheet.

On Wednesday, Lufthansa reported a group net result of 469 million euros in the April-to-June period, down by almost half on the same period last year.
 

The group is hoping to claw back revenue at Lufthansa Airlines, where delayed aircraft deliveries are disrupting fleet management and driving up repair costs for older planes still in use, while wages have gone up for staff in Germany after a series of strikes that cost the group 100 million euros in second-quarter earnings.

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