By Joanna Plucinska
LONDON (Reuters) -Lufthansa reported on Thursday quarterly operating earnings slightly above expectations and said the outlook for the fourth quarter was strong and demand was set to improve.
This comes in the wake of the group’s promise of an ambitious turnaround plan, designed to cut costs and centralise operations across its complex multihub operation. It has also struggled to finalise a deal with unions to avoid a potential strike and recover its profits.
Lufthansa had previously warned that it could see some softness in demand, particularly in its transatlantic market, in the third quarter. Analysts said the group was able to make up for soft demand with a strong Latin American market and premium bookings.
The group reported a third-quarter operating profit of 1.33 billion euros ($1.55 billion), a touch above the 1.32 billion euros projected by analysts polled by LSEG. That is down 1% from the same quarter last year, when it reported an operating profit of 1.34 billion euros.
Lufthansa also confirmed its 2025 guidance for operating profit, or earnings before interest, taxes and special items, to be significantly above last year’s 1.6 billion euros.
The third quarter, which includes the busy summer months for travellers, is usually the strongest for European airlines.
“Even though we must continue to work intensively on the turnaround of our core business and the efficiency of our airlines, we can confirm our forecast of a significant improvement in earnings in 2025 today,” Chief Executive Carsten Spohr said in a statement.
Lufthansa has struggled to recover profits in recent years as it has dealt with spiralling costs and what analysts call great complexity in its group.
Delivery delays, particularly from planemaker Boeing, haven’t helped as it has been forced to continue operating older, less efficient equipment. Wednesday’s announcement of further delays to the Boeing 777X further hampers the group’s fleet renewal plans.
That has left its shares among the weakest in the European airline sector compared to its main competitors British Airways-owner IAG and Air France-KLM.
(Reporting by Joanna Plucinska and Ludwig Burger; Editing by Kirsti Knolle, Muralikumar Anantharaman and Mrigank Dhaniwala)
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