Lufthansa Group Profits Drop Amid Rising Fuel Costs and Geopolitical Tension

The Lufthansa Group experienced a significant decline in profits during the second quarter, driven largely by a surge in kerosene prices and geopolitical instability related to the Iran crisis. The group's operative profit fell by 56 percent compared to the previous year, dropping to 383 million euros. For the first half of the year, the group reported an overall loss of 542 million euros. Fuel costs alone added approximately 750 million francs in additional expenses during the second quarter.

Performance varied across the group's subsidiaries. The Swiss airline remained a strong performer, recording an adjusted EBIT of 189.3 million francs for the first half of the year and transporting 8.5 million passengers. In contrast, the network airlines division, which includes Lufthansa, Swiss, Austrian, and Brussels Airlines, saw profits drop from 627 million euros in the prior year to 137 million euros. Lufthansa Airlines specifically recorded an operative loss during the second quarter, while Eurowings and Sun Express also reported negative results.

Despite the financial losses, passenger demand remained strong, particularly for premium offers and holiday flights. Swiss reported a temporary increase in demand for Asia routes as passengers diverted from Gulf airlines during the early stages of the Iran crisis. Lufthansa CEO Carsten Spohr stated that while the company improved occupancy and average yields, these gains were offset by fuel costs. The group now plans to implement cost discipline and network optimizations, forecasting a full year operative profit between 1.7 and 2.2 billion euros. Following the news, Lufthansa shares fell by approximately 10 percent to 8.24 euros.

Reporting on the causes of the decline differed by political lean. A center left source framed the losses as being caused by home grown reasons, suggesting Lufthansa is performing much worse than its competitors. A center right source framed the situation as a result of a hostile external environment and geopolitical uncertainties that affected the entire industry.