Home News Lufthansa first-quarter loss deepens amid rising fuel costs

Lufthansa first-quarter loss deepens amid rising fuel costs

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Lufthansa first-quarter loss deepens amid rising fuel costs

Lufthansa posted a deeper loss on Tuesday for its first-quarter of 2019, blaming higher fuel costs.

Germany’s largest airline lost €342 million, which is almost nine times deeper than that of the first-quarter a year prior.

The weak start to the year resulted in an adjusted EBIT of -€336 million, but the airline expects to see “substantially improved trends” over the rest of the year.

“The key drivers of this earnings decline were a EUR 202 million increase in fuel costs and a deterioration in unit revenues in Europe,” Lufthansa said.

Total revenues for the group were up 3% from the same period last year, amounting to a total of €7.9 billion.

Shares in the group were trading over 2% lower on Tuesday morning following the announcement.

In March, the German airline issued a wary revenue and profit guidance for the year after reduced fares and higher fuel prices dampened its 2018 earnings.

“Overcapacities, especially on short- and medium-haul European routes, substantially depressed our first-quarter earnings,” said Ulrik Svensson, Chief Financial Officer of Lufthansa.

“We are confident, though, that we will see a recovery in our unit revenues as early as the second quarter. Our confidence is based above all on our favorable booking levels for the months ahead,” the Chief Executive Officer continued in an announcement.

The company has said that for 2019 as a whole, it expects to post a year-on-year revenue growth of a “mid-single-digit percentage amount”. Additionally, it has predicted an Adjusted EBIT margin of 6.5-8%.

Lufthansa has cut its planned capacity growth for Eurowings, now expecting it to be flat instead of the 2% forecasted growth.

Low-cost airline Ryanair (LON:RYA) joins the list of airlines struggling amid rising costs and overcapacity. The Hungarian airline Wizz Air (LON:WIZZ) has also revealed its difficulties amid the increasing cost of fuel.

Elsewhere in the industry, American Airlines (NASDAQ:AAL) recently revealed the impacts of the world wide grounding of Boeing’s 737 MAX on its earnings.

At 09:14 CEST, shares in Deutsche Lufthansa AG (ETR:LHA) were trading at -2.03%.