Lufthansa challenges weigh down wider group as profits fall 37% in second quarter

Lufthansa Group adjusted earnings before interest and taxes (EBIT) fell 37% in the second quarter to €686 million ($742 million) despite revenues passing €10 billion for the first time, as challenges at its German operations in particular took a toll.

Lufthansa Airlines has notably been hit by the impact of strike disruption, higher labour costs and late aircraft deliveries, prompting the initiation of a turnaround programme at the carrier. While the German carrier still posted an adjusted EBIT profit of €213 million in the second quarter, this was down more than €300 million on the same period last year. 

”Lufthansa Airlines is particularly confronted with challenges resulting from the negative market development in the key Asia-Pacific traffic region, but also faces inefficiencies in its Lufthansa and CityLine flight operations,” the company says. ”The significant delays in aircraft deliveries are causing upheavals, in areas such as fleet management and also through the additional maintenance costs for the older aircraft still in use.

”Achieving a breakeven full-year result is becoming increasingly challenging for Lufthansa Airlines,” it adds. ”In addition to short-term measures to safeguard earnings, the airline has launched a comprehensive turnaround programme to increase efficiency, reduce complexity and improve quality, and thereby make the core brand fit for the future.”

These measures include phasing out its Airbus A330-200, A340-300, A340-600 and 747-400 sub-fleets to reduce to six the number of long-haul types it will operate by 2028.

Lufthansa Group had already flagged the continued challenges at the carrier when it earlier this month lowered its full-year guidance range to between €1.4-1.8 billion. In reiterating this guidance, it says this outlook ”is largely dependent” on the earnings performance at Lufthansa Airlines and the key fourth quarter at Lufthansa Cargo.

While its German unit was most heavily impacted across the quarter, all of the group’s passenger operations faced lower yields in the market and increased cost pressures. All five of its passenger airlines remained profitable in the second quarter, though all at slightly lower levels than the previous year.

Group chief executive Carsten Spohr says: ”It is particularly pleasing that in the current challenging environment all the other passenger airlines in the group, as well as Lufthansa Cargo, remain on course in line with market developments. Lufthansa Technik even posted another record result in the first half of the year.”