Lufthansa’s flagship airline has continued to weigh on earnings as Europe’s largest carrier grapples with high personnel costs, aircraft delays and growing competition from the Middle East and Asia.
Lufthansa anticipates lower third-quarter earnings when results are announced later this month due to declining yields and rising unit costs, amidst concerns for European airlines facing reduced demand and issues with aircraft deliveries.
Airfares in Europe and Asia are beginning to stabilise or decrease, indicating a slowdown in the post-Covid travel boom, which creates challenges for airlines dealing with higher operational costs and limited aircraft availability.
The airline expects yields to drop by a single-digit percentage while unit costs will similarly rise, and analysts have noted that Lufthansa’s cautious approach to capacity expansion last year has left it more vulnerable to this year’s yield declines.
The company reported a group net result of €469m for the April-to-June period, nearly halving compared to the previous year, and indicated ongoing challenges, including delayed aircraft deliveries and increased wage costs, which are impacting their financial recovery. Lufthansa group, Europe’s second largest airline, carried 122.5m passengers in 2023 compared with 181.74m for Ryanair, not Europe’s largest airline by a margin.
Deutsche Lufthansa chief executive officer Carsten Spohr told at a press briefing in Frankfurt: We’ll likely report strong traffic figures, but unfortunately the gap between the positive developments of the whole group and those of Lufthansa Airlines and City Airlines has widened.”
