Lufthansa slumps to Q1 loss on lower fares


  • Business
  • Wednesday, 17 Apr 2019

JOHANNESBURG: Deutsche Lufthansa AG reported a first-quarter loss because of rising fuel costs and downward pressure on fares, sending the stock plunging in a sign of deepening industry woes after the German airline cut its growth plans last month.

Lufthansa shares fell as much as 5% at the open in Frankfurt after the country’s biggest carrier disclosed an adjusted loss before interest and taxes of 336mil euros (US$380mil).

The downturn, which compared with earnings of 52mil euros a year earlier, was particularly stark because of strong results for the beginning of last year following the collapse of Air Berlin, the airline said in a statement on Monday.

The loss comes after Lufthansa opted to pare planned capacity increases this summer to bolster prices and focus on profitability. The European airline industry is coming off a tough year, with bad weather and air-traffic-control strikes among the factors hurting profit. Irish low-cost giant Ryanair Holdings Plc has warned that fares will remain depressed.

Analysts at Bernstein said Lufthansa’s first-quarter setback will “test investor patience” coming soon after the company reported results in February and it isn’t clear whether the carrier’s underlying business has suffered in recent weeks due to fare competition.

“None of this should be surprising -- but the magnitude of the miss is,” the analysts said in a research note yesterday

Lufthansa’s fuel bill rose by 202mil euros in the first quarter, in line with a company forecast for increases of 200mil euros in each of the first three quarters.

The full-year rise is expected to be 650mil euros, the airline said in a presentation last month.

The company will publish detailed first-quarter results on April 30. — Bloomberg


   

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