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The price war in European air traffic thwarts Lufthansa's profits. Due to the "aggressive" expansion of low-cost airlines and the decline in ticket prices, the group's operating profit (adjusted EBIT) is expected to reach only between 2.0 and 2.4 Billion euros this year, AUA 's mother announced Sunday night. Up to now, the management had badumed between 2.4 and 3.0 billion euros.
In its record year in 2017, Lufthansa had sales of around € 3.0 billion, and a year later it still far exceeded € 2.8 billion.
While the business continues to perform well over the long term, the inexpensive Eurowings subsidiary is expected to break breakeven and write red due to stiff competition, the Dax Group announced in 2019. Because competitors are willing to accept significant losses to increase their market share. This is also on Eurowings not without a trace. Lufthansa management also believes that the European market will remain so difficult at least until the end of 2019.
After the management around Carsten Spohr had already halted the expansion of the Eurowings flight offering for 2019 a few weeks ago, it is now also targeting lower growth for the airline's network. As a result, sales in 2019 are expected to increase only in the range of less than 10%. Until now, the direction had an increase of 4 to 6% in the eyes.
Falling ticket prices are also responsible for the decline. In the second quarter, average yields are expected to fall "significantly", especially at Eurowings. For the year as a whole, the Group's management expects a drop of around 5 to 10%, while the Group's airline companies, Lufthansa, Swiss and Austrian, expect a slight decline in terms adjusted for currency fluctuations.
Eurowings now wants to take further steps to reverse the situation, not least because its operating costs are not falling as fast as expected. Details will be announced shortly by the airline. In fact, the cheap girl, who took over much of Air Berlin, in 2019, realizes profits.
The cargo business is also less profitable than expected: the Lufthansa Cargo freight division has already removed three cargo planes from the flight schedule and is only expecting stagnant sales this year. On revenues, only three to five percent could lose their operating profit, he added. It's about half as much as previously expected.
In addition to the current activities, the Group also fears an increase in taxes payable for previous years due to a new case law of the Federal Finance Court. Therefore, management intends to make a provision of 340 million euros in the interim report for the first half.
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