LONDON/FRANKFURT: German airline Lufthansa revised its outlook on Tuesday, setting a range for its 2026 adjusted operating profit after that figure more than halved in the second quarter due to higher fuel costs tied to the U.S.-Iran war.
The group now expects an adjusted operating profit, or EBIT, of €1.7 billion to €2.2 billion ($1.96 billion-$2.53 billion), citing heightened uncertainty from high kerosene price volatility.
Lufthansa had previously forecast adjusted EBIT to come in significantly above the prior-year level of €1.96 billion.
"Today, we reflect on a challenging second quarter that was once again marked by multiple geopolitical crises and uncertainties," Chief Executive Carsten Spohr said in a statement.
"Despite our further improvement in load factor and a significant increase in yield, we were unable to fully offset the considerable rise in fuel costs."
CAPACITY CUTS Analysts have highlighted uncertainty and its potential impact on European airlines, with fuel-price volatility seen as the sector's biggest concern.
European airlines, including British Airways-owner IAG and Air France-KLM, have been hit hard by higher costs in fuel despite extensive hedging, with both companies planning to trim capacity in an effort to deal with the fallout of the war in Iran. Lufthansa said its capacity was also down around 3% in the second quarter, in part due to strike days in April, but capacity planning for the year remains unchanged and would be largely flat. Adjusted EBIT fell to €383 million in the second quarter from €870 million a year earlier. That was slightly down from €401 million projected by analysts in a company-compiled consensus. The company now expects fuel costs at €8.66 billion, after an earlier projection of €8.9 billion.
RETIRING OLD PLANES The company said it plans to retire, or temporarily ground, several aircraft to streamline operations, reduce fuel consumption and limit exposure to unhedged fuel costs. In its financial report, Lufthansa said this would include the early retirement of fuel-intensive long-haul aircraft such as the Airbus A340-600 and the temporary grounding of two Boeing 747-400s from the start of the winter flight schedule. Lufthansa added that 86% of its fuel needs for this year are covered by hedging. - Reuters
