Deutsche Lufthansa, Europe’s second- largest airline, raised its earnings forecast for 2015 after a jump in mid-year demand and a drop in oil prices contributed to a 51 per cent surge in third-quarter operating profit.
Earnings before interest and taxes, adjusted for asset valuations, disposals and pension provisions, will be in a range of €1.75 billion and €1.95 billion, Cologne, Germany-based Lufthansa said Thursday in a statement. That compares with an earlier forecast that operating profit would exceed €1.5 billion, and with last year’s figure of €1.17 billion. Shares rose to their highest price since February.
Profit growth, also helped by an expanding German economy, may prove to be a blip for Lufthansa, which warned that demand and pricing have been waning in the fourth quarter. Strong earnings may also weaken the airline’s bargaining power in a prolonged conflict with labor unions. Pilots have been protesting Chief Executive Officer Carsten Spohr’s plans to expand the Eurowings division into Europe’s third-largest low- cost airline to weather competition from discount carriers such as Ryanair.
“We must continue to work hard on the competitiveness of our cost structures,” Spohr said in the statement. “We cannot expect to fly for too long with a tailwind of low oil prices. Our aim is not to have to further adjust our network to our costs, but to give ourselves a cost structure that will enable us to open up new routes and tap new markets.”
News by Bloomberg, edited by Hospitality Ireland
