Lufthansa Group Cuts Outlook as Flagship Carrier Struggles to Break Even

Lufthansa Group lowered its outlook for the year, saying that its flagship carrier is struggling to break even. It cited negative market trends and aircraft delivery delays for the shift. 

The company, which also includes Austrian Airlines, Brussels Airlines, Eurowings and Swiss, expects its adjusted earnings before interest to fall in the range of €1.4 to €1.8 billion ($1.52 billion to $1.96 billion), down from its previous guidance of €2.2 billion ($2.4 billion). 

The group said the outlook is mostly dependent on the fourth-quarter performance of its namesake carrier and cargo. The company added that a market-related decline in traffic in all regions, particularly Asia, is partly responsible for the weaker outlook. 

For the second quarter, Lufthansa Airlines had a profit of €213m, down from €515m last year at the same time. The German flag carrier also recorded a half-year loss of €427m. Last year during this time, it reported a profit of €149m. 

Lufthansa’s Sluggish Post-Covid Recovery

The German flag carrier has grappled with a slew of issues that have eaten into its profits. Lufthansa was paralyzed by labor strikes earlier in the year that caused thousands of flight cancellations. The strikes cost Lufthansa €350m during the first quarter. 

Lufthansa has also been much slower to recover since the pandemic. The airline had a dated premium product, making it difficult for it to capitalize on the premium travel boom. The debut of Lufthansa’s Allegris cabins were delayed multiple times, finally launching in May. 

Historically, much of Lufthansa’s demand also came from business travel, a segment that is only now just starting to recover. But much of this corporate demand was for long-haul routes to Asia, another segment that hasn’t fully bounced back since Covid. 

Making matters worse, Lufthansa was also heavily exposed to Russia and Ukraine. The German flag carrier operated routes to Moscow, St. Petersburg, Lviv and Kyiv that are now off the map due to Russia’s invasion into Ukraine. The subsequent ban on flying over Russian airspace has also made it more difficult for Lufthansa to operate its Asia routes competitively. 

To address Lufthansa’s declining outlook, the group said it would launch a “comprehensive turnaround program.” The details of the plan are currently unclear.