European aviation Lufthansa Group giant has issued another profit warning due to a “negative market trend”, which is particularly impacting its flagship Lufthansa Airlines operation.
The group, which also owns Austrian Airlines, Brussels Airlines, Eurowings and Swiss, said it had seen a “market-related decline in yields” across all global regions during the second quarter, with Asia seeing the worst performance.
In a statement, Lufthansa Group said its profit before tax and interest was €686 million during the second quarter of 2024 – down from a profit of €1.1 billion for the same period last year.
Lufthansa Airlines saw the hardest hit with its quarterly profit falling by around €300 million from €515 million in Q2 of 2023 to just €213 million in the same quarter this year.
This resulted in Lufthansa Airlines going into the red in the first half of 2024 as it recorded a loss of €427 million, compared with a profit of €149 million in the first six months of 2023. The carrier was hit by a series of strikes earlier this year which has cost the group an estimated €450 million.
Even though these industrial disputes have now largely been settled, the group said it was launching a “turnaround programme” for Lufthansa Airlines.
The company added: “Lufthansa Airlines is particularly affected by the challenges posed by the negative market trend and by inefficiencies in the flight operations of Lufthansa and Cityline, also due to delayed aircraft delivery.
“It is becoming increasingly challenging for Lufthansa Airlines to break even for the full year. To counteract this, a comprehensive turnaround programme is being launched.”
Profits at the group’s other carriers are expected to be “broadly at previous year’s level” in the second half of the year.
As a result of Lufthansa Airlines’ troubles, the group said it was cutting its profit forecast for the whole of 2024 from the previous estimate of €2.2 billion to between €1.4-€1.8 billion. With the final profit for the year “largely dependent on the earnings development at Lufthansa Airlines and the traditionally important fourth quarter at Lufthansa Cargo”.
The group said it will provide further details on this financial outlook when it publishes its full second quarter results later this month.
Lufthansa Group surprised the corporate travel industry last month when it announced a new environmental cost surcharge of up to €72 per flight to cover part of the cost of complying with new green regulatory rules for airlines. The company has also just received clearance from the EU for its purchase of Italian carrier ITA Airways.