Lufthansa warns of rising prices as tourism demand takes off

Frankfurt, Germany May 5-Germany’s national flag carrier Lufthansa said Thursday that ticket prices could rise as energy costs soar following Russia’s invasion of Ukraine.

The jet fuel price increases were “too high to be offset by further cost reductions”, the group’s chief financial officer, Remco Steenbergen, told a news conference.

Higher energy costs meant “ticket prices will have to go up,” Steenbergen said.

The carrier had already “pushed out some price increases” which were “accepted” by business and leisure travelers, he added.

Lufthansa CEO Carsten Spohr said the airline was forecasting a record summer for tourism activity, with the latest data showing passenger numbers rebounding after the coronavirus pandemic.

Spohr said the number of passengers on Lufthansa flights “more than quadrupled” in the first quarter to 13 million, from three million in 2021, when travel restrictions in many markets were tougher.

“New bookings are increasing week by week,” he told a news conference.

“We expect strong growth in the summer and probably more vacationers than ever before,” Spohr said.

For business travel, the group expects traffic to reach “around 70%” of its pre-coronavirus level by the end of the year, it said in a statement.

Advertisement. Scroll to continue reading.

In total, Lufthansa plans to offer “around 75%” of its pre-crisis capacity over the year.

The figure would be higher in the summer for popular tourist destinations, reaching 95% on short-haul routes within Europe and 85% on transatlantic services, the group said.

– “On the right track” –

Lufthansa also said on Thursday that it saw a significant improvement in its financial results in the first quarter, supported by the recovery in passenger numbers.

The group posted a net loss of 584 million euros ($620 million) in the first three months of 2022, compared to a billion euros in the same quarter last year.

Lufthansa’s cargo division posted a “record result” in the first quarter, the carrier said, as cargo demand remained high amid turmoil in global supply chains.

The segment recorded operating profit – a key measure of underlying profitability – of 495 million euros, compared to 315 million euros in the first quarter of 2021.

Europe’s biggest airline group – which includes Eurowings, Austrian, Swiss and Brussels Airlines – struggled during the outbreak of the pandemic and was saved from bankruptcy by a government bailout.

But business picked up and Lufthansa said last November it had repaid the nine billion euro loan it received from the government.

The group was now “on track” to deliver positive second-quarter and full-year operating profit, chief financial officer Steenbergen said.

Advertisement. Scroll to continue reading.

The “extremely volatile” price of fuel, however, prevented the group from committing to improving its official financial outlook for the year, he said.

Tensions have also been felt by “airports, air traffic control and caterers who are facing staff shortages” leading to disruption of services, CEO Spohr said.

Some of the issues would not be resolved “until the summer”, he added.

Previous EUR/GBP: the pound falls below €1.1850
Next Financial disagreements now make Audi-McLaren F1 deal unlikely, claims report