Air travel picks up, Lufthansa’s sees jump in profits

The demand for short-haul flights in Europe is anticipated to drive growth at Lufthansa’s passenger airlines this year, the German airline said on Thursday. It also predicted a return to group operational profit for the entire year, driving its share price higher.

Following COVID-19 pandemic-related travel limitations in 2020 and 2021, passengers have started flying again, assisting airlines like Lufthansa, Air France-KLM, and British Airways-owner IAG to generate a profit this summer.

In the fourth quarter, Lufthansa anticipated to see business travel bookings approach 70%, noting that they were now at an average of 83 percent of pre-pandemic levels for the months of August through December.

Carsten Spohr, the airline group’s chief executive, claimed that the number of affluent customers prepared to spend money on hotels, rental cars, upscale dining establishments in addition to plane tickets was increasing.

These folks, he claimed, are less susceptible to economic ups and downs.

Following a 2.3 billion euro loss the previous year, Lufthansa now projects a full-year adjusted operational profit (EBIT) of more than 500 million euros ($510 million).

According to a consensus posted on Lufthansa’s website, analysts are even more upbeat, with an average prediction of 569 million euros.

On Thursday, the carrier’s stock increased by more than 5%.

The airline sector, especially in Europe, has struggled to keep up with the sudden increase in demand, resulting in long lines forming at several airports due to personnel shortages, last-minute cancellations, and irate passengers.

Airlines are reducing capacity as a result of the travel disruption; last summer, Lufthansa cancelled more than 2,000 flights. It stated that, although less than originally anticipated, it intended to provide roughly 80% of pre-crisis capacity in the third quarter and between 85% and 90% in 2023.

However, it claimed it could help it significantly increase quarterly adjusted earnings before interest and tax (EBIT) compared to the second quarter.

Due to the surge in demand for air cargo flights, Lufthansa recorded adjusted EBIT of 393 million euros for the three months that ended in June, up from an 827 million euro loss the prior year.

Due to expenses associated with aircraft cancellations, its passenger airline sector recorded an adjusted loss before interest and tax of 86 million euros for the quarter.

However, there is still a chance that some of Lufthansa’s employees may stage a walkout. On Thursday, management was in discussions with the ground crew, whose one-day strike the previous week resulted in the airline canceling more than 1,000 flights.

The missed income on one strike day costs Lufthansa between 30 and 35 million euros.

Next, the carrier and the pilots, who have already voted in favor of industrial action, are scheduled to conduct negotiations.

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