Financial Data and Key Metrics Changes - The company reported revenues exceeding €10 billion in Q2 2024, marking a 7% increase compared to the previous year, driven by an 11% increase in capacity [18] - Operating expenses rose by 10% due to higher production levels and general cost inflation, resulting in an operating result of €686 million, a decrease of €400 million year-on-year [18] - Adjusted EBIT for the first half of the year is expected to be between €1.4 billion and €1.8 billion, down from previous guidance of €2.2 billion [36] Business Line Data and Key Metrics Changes - The Passenger Airlines segment's operating results fell to €581 million from €965 million last year, primarily due to a 5.3% decrease in unit revenue [22] - Lufthansa Airlines specifically saw a significant decline in adjusted EBIT, achieving less than half of its previous year's performance [24] - Lufthansa Technik reported a 15% revenue increase in Q1 followed by another 16% in Q2, achieving record results [33] Market Data and Key Metrics Changes - The overall capacity growth in the market was 12% in Q2, while the company's capacity grew by 11%, indicating strong demand for air travel [20] - Yields in Asia dropped nearly 10% due to high capacity growth from Chinese carriers, while North America saw a more stable yield decline of 2.6% [21] - The leisure travel segment has recovered faster than corporate travel, with corporate travel expected to lag behind pre-crisis levels for several years [21] Company Strategy and Development Direction - The company is focusing on modernization rather than restructuring, with a turnaround program aimed at improving efficiency and profitability [48] - Strategic milestones include the launch of Lufthansa City Airlines to enhance cost efficiency and the acquisition of ITA to expand market presence [14][15] - The company aims for an 8% EBIT margin in the long term, with a focus on premium services and operational improvements [65] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the first half of the year did not meet expectations due to strikes and operational challenges, but expressed optimism about future demand, especially in premium cabins [5][43] - The company expects a positive result for the year driven by sustained demand and strong performance in Lufthansa Technik [43] - Future capacity planning will be adjusted to support yield development, with a focus on maintaining unit costs [60][38] Other Important Information - The company has implemented a liability-driven investment strategy to manage pension obligations and net debt, which has slightly decreased [35] - Free cash flow generation was better than operating results suggested, supported by robust summer season bookings [34] Q&A Session Summary Question: Financial targets associated with the transformation plan - The company aims for an 8% margin as a long-term target, which is essential for future viability [45] Question: Costs of restructuring and plans for AirPlus proceeds - The company clarified that it is focusing on modernization rather than restructuring, with plans to invest proceeds from AirPlus into core business areas [47][52] Question: Capacity ramp-up and profitability outlook - Management indicated that while capacity growth may not reach 100% of 2019 levels, yield is prioritized over growth to enhance profitability [60] Question: Regional performance and unit cost development - The company noted that the Middle East market is facing challenges, while unit costs are expected to remain flat despite inflationary pressures [70]

Core Viewpoint - Lufthansa has issued a profit warning for 2024 following a disappointing second quarter and has initiated a "turnaround" plan for its flagship carrier, which may struggle to break even this year [1][4]. Financial Performance - The group now anticipates an operating profit of €1.4-1.8 billion ($1.5-$1.9 billion) for the year, a reduction from the previous estimate of approximately €2.2 billion [2]. - The second-quarter operating profit was reported at €686 million, a decline of nearly 40% compared to the same period last year, although it slightly exceeded analysts' expectations of €646 million [3]. Challenges Faced - Lufthansa's flagship carrier experienced a significant profit drop due to adverse market conditions, inefficient flight operations, and delayed aircraft deliveries [4]. - The airline is encountering multiple challenges, including a substantial first-quarter loss attributed to staff strikes for higher wages amid rising inflation [6]. - The ongoing geopolitical tensions, particularly the Hamas-Israel conflict, have led to flight suspensions to and from certain destinations, further complicating operations [7]. Strategic Initiatives - To address the financial difficulties, Lufthansa is launching a comprehensive turnaround program, although specific details have not been disclosed [4]. - The company plans to introduce an environmental charge for fares in Europe to manage costs associated with increasing EU climate regulations, particularly regarding sustainable aviation fuel [8]. - Lufthansa is also looking to enhance its position through the acquisition of a stake in ITA Airways, which has received conditional approval from the EU [8]. Market Context - The broader aviation industry, including major competitor Airbus-KLM, is also facing challenges, with Airbus-KLM reporting a loss of €522 million in the first quarter due to rising costs and geopolitical tensions, despite an increase in passenger numbers and ticket prices [9].

Core Viewpoint - Lufthansa is implementing an environmental charge of up to 72 euros ($77) on fares in Europe to address the increasing costs associated with EU climate regulations [2][10]. Group 1: Regulatory Impact - The environmental charge will apply to all flights departing from EU countries, as well as Britain, Norway, and Switzerland, starting January next year [3][10]. - The EU legislation mandates airlines to gradually increase the use of sustainable aviation fuel (SAF) on routes departing EU airports, starting with a requirement of 2% SAF in 2024, increasing to 6% by 2030, and reaching 70% by 2050 [4][12]. - Lufthansa is facing additional costs from changes to the EU's emissions trading system and other regulatory measures [6][11]. Group 2: Financial Performance - After receiving a government bailout during the COVID-19 pandemic, Lufthansa reported strong profits in 2022 and 2023 due to a resurgence in travel demand [7]. - Despite the recovery, the company experienced a significant loss in the first quarter of the year due to a series of strikes [15]. Group 3: Industry Challenges - The aviation sector is particularly challenging to decarbonize, with SAF being a crucial component for meeting emissions targets, although it is currently more expensive to produce [5]. - Airlines for Europe, representing major airline groups including Lufthansa, has expressed concerns about the minimal production of SAF in Europe compared to initiatives in the United States [13]. Group 4: Environmental Goals - Lufthansa aims to halve its net carbon emissions by 2030 compared to 2019 levels and to achieve carbon neutrality by 2050 [14].

German airline firm Lufthansa Group said Tuesday that it would add an "environmental cost surcharge" to ticket prices as soon as this week, which could be as high as 72 euros ($77) for some flights. "The surcharge is intended to cover part of the steadily rising additional costs due to regulatory environmental requirements," Lufthansa said in a statement, pointing to regulations from the European Union and International Civil Aviation Organization. The additional cost will be applied to fights departing fro ...

Deutsche Lufthansa AG has a Zacks Rank of #2 (Buy), while Southwest Airlines has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that DLAKY likely has seen a stronger improvement to its earnings outlook than LUV has recently. But this is just one piece of the puzzle for value investors. DLAKY currently has a forward P/E ratio of 4.81, while LUV has a forward P/E of 27.56. We also note that DLAKY has a PEG ratio of 1.58. This popular metric is similar to the widely-known ...

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: Credit: CC0 Public Domain The US Department of Transportation said Monday that three airlines including German carrier Lufthansa have been made to pay over $900 million in passenger refunds due to pandemic-related flight cancellations or changes. The department is also looking into $2.5 million in civil penalties against the airl ...

Financial Data and Key Metrics Changes - The Lufthansa Group reported revenues of €7.4 billion, a 5% increase year-over-year, despite a higher-than-expected quarterly loss of €849 million primarily due to strike effects [9][24] - Adjusted free cash flow was positive at €3 million, although lower than the previous year [9] - The adjusted EBIT loss for the first quarter was €849 million, significantly impacted by strikes and subdued cargo results [24][25] - Net debt decreased, and available liquidity increased to €10.8 billion, supported by a new revolving credit facility [31][32] Business Line Data and Key Metrics Changes - The passenger airlines segment experienced an operating loss of €918 million, up from €512 million the previous year, with strikes accounting for approximately €300 million of the increase [26] - Cargo division profits were down due to tough comparisons from the previous year, but would have achieved breakeven without strike impacts [29] - Lufthansa Technik showed resilient performance with a 4% increase in results, excluding strike impacts, with adjusted EBIT at €260 million [30] Market Data and Key Metrics Changes - The demand for air travel remained strong, with 24 million guests welcomed on board, a 12% increase from the previous year [9] - Bookings for the summer period were up 16% compared to the previous record year, indicating strong demand [18] - The recovery in Asia Pacific is slower, particularly in China, while India and Japan are performing better [19][60] Company Strategy and Development Direction - The company is focused on enhancing customer experience through investments in fleet modernization and the launch of new products like the Allegris cabin [11][12] - Lufthansa City Airlines is set to strengthen the short-haul network and support long-haul growth [15] - The company aims to transform into a global airline group with a multi-hub, multi-airline, multi-brand business model [22] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging operating environment due to geopolitical instability, rising costs, and supply chain bottlenecks [6][8] - Despite a difficult quarter, management expressed optimism for the rest of the year, citing strong summer bookings and strategic investments [11][18] - The company expects adjusted EBIT to be around €2.2 billion for 2024, with adjusted free cash flow projected to be at least €1 billion [38] Other Important Information - The company proposed a dividend payment of €0.30 per share, indicating financial health and commitment to shareholder value [32] - The company is not considering share buybacks at this time, prioritizing fleet renewal investments instead [60] Q&A Session Summary Question: Regarding Pratt & Whitney compensation and its booking - Management stated that no agreement has been reached yet, and compensation will be recorded as costs are incurred over the coming years [40] Question: Update on ITA and remedies - Management expressed optimism about the ITA deal, emphasizing the need for direct access to global markets and constructive discussions with the EU Commission [41][42] Question: Interplay between new aircraft and capacity growth - Management confirmed that the reduction in capacity from 94% to 92% reflects delays in aircraft deliveries, but does not significantly impact overall capacity plans [46] Question: Update on corporate travel recovery - Corporate travel is expected to reach around 70% of pre-pandemic levels by the end of the year, with Q1 at approximately 65% [50] Question: CASK assumptions and productivity compensation - Management indicated that CASK guidance includes productivity arrangements, with expected increases in staff costs due to recent wage agreements [73] Question: MRO business and supply chain challenges - Management noted that while MRO margins are expected to remain flat, the overall performance is strong, and the supply chain challenges are creating both positive and negative impacts [55][67]

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: Strikes have taken a deep bite into Lufthansa balance sheet but the airline still expects to end 2024 with an operating profit of 2.2 billion euros. German airline giant Lufthansa reported a hefty first-quarter loss Monday and downgraded its 2024 outlook due to recent strikes, while warning of risks from conflict in the Middle E ...

Airlines flying to the Middle East are beginning to make changes to their schedules after Iran launched over 300 drones and missiles at Israel in a brutal assault. Reuters reported that German airline Lufthansa was suspending scheduled flights to Tel Aviv, Amman and Erbil until Tuesday. The company also announced it would be suspending flights to Beirut and Tehran until at least Thursday, due to violence in the Middle East.Lufthansa, which is also linked to Swiss and Austrian airlines, said it was evaluatin ...

Deutsche Lufthansa AG (OTCQX:DLAKF) Q4 2023 Earnings Conference Call March 7, 2024 6:30 AM ET Company Participants Dennis Weber - Head of Investor Relations Carsten Spohr - Chief Executive Officer Remco Steenbergen - Chief Financial Officer Conference Call Participants Harry Gowers - JPMorgan Jaime Rowbotham - Deutsche Bank Tobias Fromme - Bernstein Stephen Furlong - Davy Research Muneeba Kayani - Bank of America James Hollins - BNB Paribas Ruairi Cullinane - RBC Capital Markets Sandra Hadiza - HSBC Neil Gl ...