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FILE PHOTO: The tail of a Lufthansa aircraft is seen outside a Lufthansa Technik maintenance hangar at the Munich International Airport in Germany on April 18, 2019. REUTERS / Michael Dalder
FRANKFURT (Reuters) – German airline Lufthansa on Sunday lowered its earnings outlook for 2019, due to fierce competition from its low-cost rivals on prices in Europe.
The group's adjusted earnings before interest and taxes (EBIT) margin is expected to be between 5.5% and 6.5%, down from 6.5% to 8% previously, Lufthansa said in a statement.
This would imply a pre-tax EBIT of between € 2 billion and € 2.4 billion ($ 2.24 billion to $ 2.69 billion), compared to $ 2.4 billion. previously referred to, he said.
"Returns on the European short-haul market, particularly in the German and Austrian markets of the group, are affected by persistent overcapacity caused by carriers willing to accept significant losses to increase their market share", he declares.
He also mentioned the overcapacity and high costs of jet fuel, which he said could exceed last year's figure of 550 million euros, despite the recent drop in crude oil prices.
Lufthansa announced that it would constitute a provision for tax risk of 340 million euros in its accounts for the first half of 2019, relating to a tax case opened in Germany and appearing between 2001 and 2005 .
Report by Vera Eckert, edited by Subhranshu Sahu
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