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Wednesday 21 August 2019

Lufthansa braced for turbulence amid fare war

Lufthansa's home German market has become a key battleground, with the collapse of smaller carriers starting a fight for market share. Photo: AFP/Getty Images
Lufthansa's home German market has become a key battleground, with the collapse of smaller carriers starting a fight for market share. Photo: AFP/Getty Images

William Wilkes

Lufthansa says threats to its financial outlook are mounting after a fare war and a stuttering global economy dented second-quarter earnings.

The airline warned that the fight for market share means business trends could deteriorate further in the second half, even as the group stood by reduced full-year profit guidance issued last month.

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Europe's biggest airline joins discount rival Ryanair in clinging to its earnings goals in the face of falling fares, slowing GDP growth, rising fuel costs, disruption from congested airspace and extreme weather.

Lufthansa's home German market has become a key battleground, with the collapse of smaller carriers starting a fight for market share.

"Europe is the problem," Bernstein analyst Daniel Roeska said, adding that quarterly figures in line with expectations do not allay more deep-seated concerns. "As we move into peak summer, messages of a tough environment continuing should leave investors cautious on demand for the rest of 2019," he said.

Shares in Lufthansa traded 5.2pc lower yesterday morning in Frankfurt, taking the decline this year to 27pc and reducing the company's market value to €6.83bn. The stock fell 12pc after a June 17 profit warning.

Adjusted earnings before interest and tax dropped by a quarter to €754m in the three months through June, Lufthansa reported, in line with an average analyst estimate of €757m.

Bloomberg

Irish Independent

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