Lufthansa Upbeat on Outlook as Travel Boom Extends to Full Year

2023-11-02 14:54

Deutsche Lufthansa AG said it’s on track to meet its financial targets this year and in 2024 as

Deutsche Lufthansa AG said it’s on track to meet its financial targets this year and in 2024 as robust travel demand during the summer season extends into the slower final months of the year and leisure travelers upgrade to more expensive seats.

Adjusted operating profit will exceed €2.6 billion ($2.8 billion) this year, after hitting €1.47 billion in the third quarter, beating analyst estimates, according to a statement released on Thursday. The company also said it expected to hit a target for its earnings margin of at least 8% in 2024.

Lufthansa said bookings for the Christmas season are strong, with an ongoing trend toward bookings in first and business class. While earnings at its cargo division fell to just €1 million during the quarter due to an economic slowdown, overall ticket yields at its airline businesses were 25% above pre-pandemic levels, boosting profits.

“Even though the geopolitical situation remains challenging, our booking outlook gives us reason to be positive - not only for a very good Group result this year, but also beyond,” Chief Executive Officer Carsten Spohr said in the statement.

Lufthansa and other airlines have been profiting from strong demand for air travel, helping them repair balance sheets that took a hit from the coronavirus pandemic. Concerns are mounting about longer-term demand as households wrestle with inflation and rising interest rates.

The airline group had a margin of 8.5% so far this year ahead of its final quarter, traditionally a period in which the margin is lower. That’s double the figure achieved in the same period last year, putting the company on track to reach its longer-term profitability ambition in 2024.

Lufthansa cautioned that it’s “mindful of geopolitical and macroeconomic risks,”, and that the company will “preserve maximum flexibility to adapt its plans if necessary.” The airline reiterated that it’s seeking approval from the European Commission to buy a 41% stake in Italy’s ITA Airways by early 2024, a process that has has been drawn out amid close scrutiny by regulators.