The Lufthansa Group will post lower than expected results for the first quarter of 2019, the company said yesterday.
The aviation group said it expected to report a €336 million (£290m) pre-tax loss, down from a €52 million (£45m) profit over the same period last year.
It attributed the swing to an extra €200 million in fuel costs, as well as capacity growth in Europe leading to lower unit revenues on short- and medium-haul routes. It added that Q1 results last year had been boosted by the collapse of Air Berlin.
Preliminary results show its Network Airlines segment – which includes Lufthansa German Airlines, Swiss and Austrian Airlines – lost €160 million, while its Point-to-Point Airlines segment, comprising Eurowings, Germanwings, Eurowings Europe and Brussels Airlines, saw a €257 million loss. Its cargo, technical and catering segments all made a profit.
Revenue is expected to be up 3 per cent year-on-year, to €7.9 billion.
The group said it was confident unit revenues would increase in the second quarter thanks to strong bookings, and said it would maintain its adjusted EBIT margin of between 6.5 and 8.0 per cent for the year.
Lufthansa will shrink its seats by 1.5 per cent in April 2019, according to a Barclays estimate quoted by the Financial Times.
“We are seeing good booking levels for the quarter ahead,” commented Ulrik Svensson, group CFO.
“At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.”
Lufthansa Group reported €2.8 billion in earnings before interest and taxes in 2018.
International Airlines Group, which includes British Airways, Iberia and Aer Lingus, made €3.2 billion in pre-tax profit for the year.
Higher fuel prices, overcapacity and other headwinds have particularly hit low-cost carriers in recent years, with the UK’s Flybmi, Iceland’s Wow Air and Germany’s Germania ceasing operations in 2019.
