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Lufthansa Eyes Stable Margins, Mid Single-Digit Revenue growth in 2019

By Dave Simpson

Lufthansa has forecast stable margins and revenue growth in the mid-single digits this year as it eyes cautious expansion in the busy summer months, manages costs and targets break even at its budget airline Eurowings.

Germany's biggest airline, reporting an 11% decline in fourth-quarter operating profits, said it would focus on "quality" growth this year and reduce growth in its peak summer capacity to 1.9%.

"Nonetheless, group revenue should rise in the mid-single-digit percentage area," Lufthansa said this week, adding that cost savings would compensate for €650 million in extra fuel costs expected this year.

Share Price And EBIT

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Lufthansa's acquisition of Air Berlin removed a key competitor on its home market, but the cost of integrating the operation has hurt profitability and its share price, which has declined by 12% over the past 12 months.

Earnings before interest and tax (EBIT) fell by 11% to €378 million in the seasonally-quiet fourth quarter, Lufthansa said, just below a mean forecast of €397 million in a poll of analysts.

For 2018 as a whole, Lufthansa's EBIT margin declined to 7.9% from 8.3%. The company, which employs more than 135,000 people, forecast a margin of between 6.5% and 8% in 2019.

At Eurowings, which took over large parts of Air Berlin's aircraft fleet, management is targeting break even in 2019 "and with that a significant improvement compared to a year earlier", Lufthansa said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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