Lufthansa, a German airline, warned on Tuesday that operating profit could decline this year after it more than halved in the second quarter due to higher fuel costs related to the US-Iran war, sending its shares down, acccording to reports.
The company projected that its adjusted earnings before interest and taxes in 2026 would range from €1.7 billion to €2.2 billion ($2.0 billion to $2.5 billion). It had earlier predicted adjusted EBIT would be significantly higher than the €1.96 billion reported in the prior year.
At 10:23 am CET, Lufthansa's stock fell 9.55% to €8.356 per share, according to a report by Reuters.
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As investors concentrated on the uncertain outlook and lower-than-expected quarterly results, especially increased unit prices, shares fell 8% in early trading.
In a statement, Chief Executive Carsten Spohr stated, "Today, we reflect on a challenging second quarter that was once again marked by multiple geopolitical crises and uncertainties."
"Despite our further improvement in load factor and a significant increase in yield, we were unable to fully offset the considerable rise in fuel costs." A measure of how full an airline's aircraft are is called the load factor.
Fuel costs have somewhat decreased since the start of the US war on Iran in late February, but they are still extremely unpredictable due to the uncertainty surrounding the success of diplomatic efforts, which presents a significant challenge for businesses.
According to Lufthansa, strike days in April contributed to a 3% decrease in capacity in the second quarter. Its capacity forecasts for the entire year, however, have not changed and are anticipated to be essentially flat.
According to Lufthansa, strike days in April contributed to a 3% decrease in capacity during the second quarter. Its capacity plans for the entire year, however, are still the same and are anticipated to be essentially flat.
Adjusted EBIT dropped to €383 million in the second quarter from €870 million a year earlier, falling short of the average estimate of €401 million made by analysts in a consensus prepared by the firm.
In contrast to its previous estimate of €8.9 billion, the business now projects fuel expenses for 2026 to be €8.66 billion.
According to Lufthansa, it intends to retire or temporarily ground some aircraft in order to simplify operations, lower fuel usage, and minimise exposure to unhedged fuel costs.
According to Lufthansa's financial report, two Boeing 747-400s will be temporarily grounded starting with the winter flight schedule, and fuel-intensive long-haul aircraft like the Airbus A340-600 will be retired early.
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The airline stated 86% of Lufthansa's fuel requirements for this year are hedged. In a research note, Metzler stated that Lufthansa was now justified in increasing ticket rates in order to cover increased expenses.
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