Lufthansa has become the latest European airline to announce a scaling back of growth plans in response to worldwide economic uncertainty, anxiety over terrorism and air traffic disruption.
On Tuesday, the German group, which owns a series of European airlines including Swiss and Austrian Airlines, as well as its flagship Lufthansa brand, said it was scaling back the expansion of its winter timetable from 6 per cent to 5.4 per cent.
It disclosed the change as it reported first-half adjusted earnings before interest and tax — a measure that excludes some accounting charges — had risen 13 per cent to €529m, on revenues that were down 2.1 per cent to €15bn.
After news of the revised growth plan, Lufthansa shares were down 2.4 per cent in lunchtime trading in Frankfurt, at €10.41. They have now fallen by more than €1 since a profit warning on July 20, when the company sharply downgraded its forecast for full-year profits.
Lufthansa’s scaling back of its plans follows an announcement on Friday by International Airlines Group, British Airways’ parent, that it was also cutting back its plans for the winter amid tough trading conditions.
European airlines have been reining in growth in an effort to avoid flooding the market with excess capacity, which would drive down fares. Meanwhile, Ryanair, the continent’s biggest low-cost carrier, is preparing for a price war as it seeks to fill flights during a significant expansion of its fleet.
Carsten Spohr, Lufthansa’s chief executive, warned that the industry had to prepare for a “difficult second half-year”.
“The terrorist attacks in Europe and also the increasing political and economic uncertainties are having a tangible impact on passenger volumes,” he said. “The forward bookings, in particular for our long-haul services to Europe, have declined significantly. We expect the high pricing pressure to continue.”
Under Lufthansa’s revised growth plans, it will operate one fewer long-haul aircraft and six fewer short-haul aircraft over the winter than it had previously intended.
In the first half of the year, the airline’s improved performance was largely due to a 42 per cent jump in earnings before interest and tax at the core Passenger Airline Group, to to €393m. However, sales at the division declined 2.9 per cent to €11.3bn as a result of a 6.6 per cent decline in revenue per available seat kilometre, to 7.6 cents.
Mr Spohr said recent market developments underlined the importance of pressing ahead with cost-reduction initiatives.
In the Logistics Business Group, the company’s air cargo operation, Lufthansa lost €45m before interest and tax in the first half, compared with a €50m profit in the first half last year. Revenue fell 19 per cent to €976m.
It blamed “massive market overcapacities”, which have caused yields in air freight to fall to levels last seen during the financial crisis of 2008-09.
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