Lufthansa Returns To Profit As Travel Surges

Last Thursday, Lufthansa reported that it expects demand for short-haul flights in Europe to drive growth at its passenger airlines this year. It expects a return to group operating profit for the whole year, propelling its shares higher.

Following the COVID-19 pandemic-related travel limitations in 2020 and 2021, airlines like Lufthansa, Air France-KLM and British Airways-owner IAG returned to profit this summer.

According to Lufthansa, eighty-three percent of pre-pandemic bookings have been made for August to December, which expects business travel bookings to reach 70 percent in the fourth quarter. Lufthansa added.

CEO Carsten Spohr said the airline group was seeing more and more wealthy passengers ready to spend money on hotels, rental cars, luxury restaurants, and flying tickets.

“These people are less susceptible to economic up-and downturns,” he said.

Lufthansa now aims to post a full-year adjusted operating profit of more than 500 million euros (A$747 million), reversing last year’s 2.3 billion euro deficit.

According to Lufthansa’s website, analysts are even more enthusiastic, forecasting 569 million euros(A$833 Million).

After this announcement, the company’s stock rose more than 5%.

A lack of personnel has caused long lines at airports around Europe, leading to last-minute cancellations and angered passengers as the airline sector has grappled with the tremendous rise in demand.

This summer, Lufthansa is cancelling more than 2,000 flights. In the third quarter, it said it is projected to offer roughly 80% of pre-crisis capacity, less than planned, and 85-90% in 2023.

As a result, it expects a significant rise in adjusted quarterly profits before interest and tax compared to the second quarter.

Flight delays and cancellations cost 86 million euros in the third quarter, which resulted in an adjusted loss before interest and tax of that amount.

The possibility of a strike by Lufthansa employees remains a source of concern for the airline. On Thursday, the airline’s management met with ground personnel whose one-day strike last week forced the cancellation of more than 1,000 flights.

Lufthansa loses 30 to 35 million euros a day in revenue due to strikes.

Pilots, who have already voted to go on strike, will meet with the carrier soon.