Get the app today! Download iPhone App Download Android App

SUBSCRIBE

Lufthansa Q1 Net Loss Widens As Fuel Costs, Overcapacity Weigh

Published on May 6 2019 10:00 AM in General Industry tagged: Trending Posts / Lufthansa

Lufthansa Q1 Net Loss Widens As Fuel Costs, Overcapacity Weigh

Lufthansa has said its net loss widened nine-fold to €342 million in the first three months of the year, hurt by rising fuel costs and excess capacity in Europe.

"We are confident, though, we will see a recovery in our unit revenue as early as the second quarter. Our confidence is based above all on our favourable booking levels for the month ahead," chief financial officer Ulrik Svensson said.

European airlines are battling overcapacity and high fuel costs, while uncertainty around Brexit has led some travellers to delay booking flights for their summer holidays.

Expectations

Lufthansa expects the market to grow by 4% in summer, compared with a rise of 9% seen in winter, while it expects its home market - defined as Germany, Austria, Switzerland and Belgium - to grow by 3%.

By contrast, Lufthansa now expects capacity at Eurowings to be flat, compared with previous forecast of 2% growth. The carrier is planning to offer 1.9% more flights globally.

For 2019, the group still expects to make an adjusted operating profit margin of 6.5%-8%. Fuel costs are projected to be €700 million above the previous year, and €50 million more than its previous guidance.

Adjusted earnings in its Other Businesses and Group Functions segment is expected to be €100 million below the previous year, compared with a miss by €150 million projected earlier.

The first quarter is traditionally the weakest for airlines.

Earlier this month, Lufthansa had said a €200 million rise in fuel costs weighed on earnings, while ticket prices took a major dive.

Return On Available Seat Kilometres

Quarterly return on available seat kilometres was down 8.5% at its low-cost carrier Eurowings and 5.2% in its other airlines, while costs were reduced 7.2% and 0.8%, respectively.

The sector has seen a number of recent failures, such as that of Iceland's WOW, Britain's Flybmi, German holiday airline Germania and Nordic budget airline Primera Air.

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

Share on Facebook Share on Twitter Share on Google+ Share on LinkedIn Share on Tumblr Share via Email