DEUTSCHE Lufthansa’s flagship airline has continued to weigh on earnings as Europe’s largest carrier grapples with high personnel costs, aircraft delays, and growing competition from the Middle East and Asia, said its chief executive officer Carsten Spohr.
“We’ll likely report strong traffic figures, but unfortunately the gap between the positive developments of the whole group and those of Lufthansa Airlines and City Airlines has widened,” Spohr said on Monday (Oct 1), referring to third-quarter figures.
Lufthansa is set to report the numbers on Oct 29. The airline already revised its full-year outlook in July, saying at the time that breaking even at its namesake German unit will be “increasingly challenging” this year.
In the first half, the Lufthansa Airlines subsidiary had an adjusted operating loss of 427 million euros (S$609.5 million), compared with a profit of 149 million euros a year earlier.
In response to the slower business, Lufthansa has initiated a savings plan as stiff competition drives down fares and corporate travel has not rebounded fully from the pandemic.
Lufthansa is also eliminating its direct daily flight from Frankfurt to Beijing because the airline is deploying fuel-guzzling, older aircraft on that service that makes the route unprofitable.
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On Monday, Spohr said the airline has been unable to add more capacity and upgrade to newer jets due to production delays at Airbus and Boeing.
Both manufacturers have struggled to lift output as they contend with strained supply chains, as well as shortfalls in manufacturing quality in Boeing’s case.
“We’re missing more aircraft that we’ve ordered from Boeing than we actually have in the airline,” Spohr said.
Delivery of the 787 Dreamliners has been held up by unresolved paperwork connected with new cabin interiors. At the same time, the new 777 model is still undergoing certification, with an entry into commercial service not expected until late 2025, or even sometime in 2026.
This has forced Lufthansa to hold onto older planes for longer, including out-of-production four-engine models such as the Airbus A340 and the Boeing 747-400. The company has also brought back its Airbus A380 double-deckers from temporary storage.
The muted outlook for the mainline airline contrasts with more upbeat operations at Lufthansa’s other divisions. Spohr said the group saw “enormously strong demand” during the summer season, noting an 88 per cent load factor across its businesses in August.
Lufthansa shares have lost about 17 per cent this year, the second-worst performer on the Stoxx 600 Travel & Leisure Index. BLOOMBERG
