Cyprus Mail

Lufthansa slashes 2024 outlook, citing strikes and capacity snags

Lufthansa planes at Frankfurt airport, Germany, March 7, 2024. REUTERS/ Kai Pfaffenbach/File Photo
Lufthansa planes at Frankfurt airport, Germany, March 7, 2024. REUTERS/ Kai Pfaffenbach/File Photo

Lufthansa (LHAG.DE) slashed its 2024 earnings outlook on Monday, blaming a series of strikes and a slower than planned ramp-up of capacity, in a profit warning that sent its share price sliding by more than 4 per cent to a five-month low.

The German flag carrier now expects adjusted earnings before interest and taxes (EBIT) of 2.2 billion euros ($2.3 billion) this year, it said in a statement, versus a previous forecast for stable earnings compared with its 2.68 billion euro adjusted EBIT result in 2023.

Adjusted free cash flow in 2024 is expected to be at least 1 billion euros, down from the previous forecast of at least 1.5 billion, it added.

The airline also reported a first-quarter loss of 849 million euros, against a 273 million loss the previous year.

“The loss was higher than expected due to various strikes … which impacted earnings by around EUR 350 million,” the statement said.

Lufthansa shares were trading 4.3 per cent lower by 1510 GMT at 6.580 euros, after falling as low as 6.576 euros, their lowest since November 2023.

The company has agreed in recent weeks to raise the pay of both its flight attendants and ground staff to end a series of labour stoppages that forced sweeping cancellations.

Separate industrial action by German airport security staff has added to the company’s woes.

Lufthansa is also among airlines that have canceled a number of flights to and from the Middle East as tensions spike between Iran and Israel.

The group said it expects its operating result in the second quarter to be lower than the previous year, reporting an additional negative impact of 100 million euros during that period.

In the second quarter of 2023, Lufthansa posted an adjusted EBIT of 1.09 billion euros.

The second-quarter impact was because of effects that now-settled wage disputes, particularly at Lufthansa Airlines, had on short-term demand for travel bookings, as well as ongoing conflicts at Austrian Airlines, Lufthansa said.

“In addition, the ramp-up of capacity in the second quarter is forecasted to be slightly lower than originally planned to support improvements in punctuality for the customers and because of delays in new aircraft deliveries,” the airline added.

The group is set to publish its final results for the first quarter on April 30.

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