Deutsche Lufthansa AG forecast rising profit through year-end, as strong demand for air travel combines with capacity constraints to drive ticket prices higher.
Europe’s biggest airline group expects third quarter earnings above the pre-pandemic level of €1.3 billion ($1.42 billion), it said in a statement Thursday. That will propel full-year earnings to above €2.6 billion, in line with analysts’ expectations.
Healthy summer demand helped the airline to almost triple adjusted earnings before interest and taxes to €1.1 billion in the second quarter, in line with analysts’ estimates. Revenue was up 17% from a year earlier.
Lufthansa expects demand for flying to remain robust for the remainder of the year with bookings for the late summer and early winter seasons at 90% of pre-pandemic levels.
The German airline is the last of Europe’s large network carriers to report second-quarter results. British Airways parent IAG SA reported profit and revenue that beat estimates, helped by higher ticket prices, while a lack of planes will make Air France-KLM unable to take full advantage of strong demand.
Budget carrier Wizz Air Holdings Plc also reported strong summer demand on Thursday, posting fiscal first-quarter profit that beat analysts’ estimates.
Lufthansa said it plans to offer 85% of its pre-crisis capacity in the final quarter, in line with previous statements. Amid hot demand for leisure travel, the company’s strategy of raising ticket prices is paying off.
Corporate travel has yet to fully recover from pre-pandemic levels, and will remain below 2019 levels through year-end, while the boom in air-cargo earnings tied to Covid disruptions is cooling. Lufthansa said second-quarter profit in the segment dropped more than 90% to €37 million from a year earlier.
The German airline aims to get as close to an 8% earnings margin it’s targeting for 2024 by the end of this year, Chief Financial Officer Remco Steenbergen said in the statement. That would help the company pay down debt incurred during the coronavirus pandemic.
(Updates with details on IAG, Air France-KLM earnings)
