Rising fuel costs and overcapacity in Europe dragged the group’s results downward. But it remains optimistic about the full year.
As it warned in mid-April, Lufthansa Group has reported a first-quarter net loss that increased by nine times over from Q1 2018, to €342 million, dragged down by rising fuel costs and overcapacity in Europe, Reuters reports.
The results come as European airlines battle problems of overcapacity, high costs, and uncertainty surrounding Brexit leading some travellers to delay travel and holidays.
“We are confident, though, that we will see a recovery in our unit revenue as early as the second quarter,” Ulrik Svensson, Lufthansa’s chief financial officer, said. “Our confidence is based above all on our favourable booking levels for the month ahead.”
The group’s optimism stems from the fact that it expects the market to grow 4% this summer, even though it follows a rise of 9% in winter.
It expects its home market, which it defines as Germany, Austria, Switzerland and Belgium, to grow in summer by 3%.
However, it expects capacity at its low-cost carrier Eurowings to be flat, in contrast to an earlier forecast of 2% growth. Eurowings is planning to offer 2% more flights globally.
Return on available seat kilometres during this traditionally weak quarter for airlines was down 8.5% at Eurowings and 5.2% at the group’s other airlines, while costs were reduced 7.2% and 0.8%, respectively.
Looking ahead to the whole year, the group expects fuel costs to be €700 million above last year and €50 million more than its previous guidance – yet it still anticipates an adjusted operating profit margin of 6.5% to 8%.