Lufthansa Cuts 2024 Earnings Forecast Amid Q1 Losses

Lufthansa Adjusts Earnings Outlook Amidst Operational Challenges

In a recent development that has rippled through the aviation industry, Lufthansa has revised its financial forecast for 2024, citing a cocktail of operational hurdles that have affected its bottom line. The airline has been grappling with the aftermath of strikes and a slower ramp-up of capacity, which has necessitated a recalibration of its earnings expectations.

The German carrier now anticipates an adjusted EBIT of 2.2 billion euros for the year, a downward revision from the previously projected stability in earnings, which were aligned with the 2.68 billion euro adjusted EBIT result from 2023. This adjustment reflects the impact of recent labor disputes and operational challenges that have beset the airline.

Moreover, Lufthansa has reported an adjusted free cash flow expectation for 2024 to be at least 1 billion euros, a reduction from the former forecast of at least 1.5 billion euros. This revision comes on the heels of a first-quarter loss of 849 million euros, a significant increase from the 273 million loss reported in the same period last year.

The company’s shares felt the immediate impact of this announcement, with a dip of more than 4 percent to a five-month low. The financial markets responded swiftly, reflecting investor concerns over the airline’s profitability amidst ongoing labor disputes and external geopolitical tensions.

Lufthansa has taken steps to mitigate these challenges by agreeing to wage increases for its flight attendants and ground staff, aiming to put an end to the strikes that have led to extensive cancellations. However, separate industrial action by German airport security staff and regional geopolitical tensions, particularly affecting flights to and from the Middle East, continue to exert pressure on the airline’s operations.

The group also foresees a lower operating result in the second quarter compared to the previous year, with an anticipated additional negative impact of 100 million euros during that period. This is attributed to the lingering effects of wage disputes and ongoing conflicts at subsidiary airlines.

Lufthansa is taking measures to enhance punctuality for its customers by adjusting its capacity ramp-up plans for the second quarter. This strategic move is also influenced by delays in new aircraft deliveries, which are crucial for expanding operational capabilities.

Stakeholders and industry watchers are keenly awaiting Lufthansa’s final results for the first quarter, which are slated for release on April 30. The airline’s performance will be closely scrutinized as it navigates through these turbulent times.

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