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].
Lufthansa issues profit warning, launches 'turnaround'