Lufthansa: quarterly profit drops as price war bites

(CercleFinance.com) - Lufthansa has posted quarterly operating profit that was in line with expectations on Tuesday, after expectations were dampened by the airline's profit warning last month.


The German carrier's adjusted EBIT dropped to 754 million euros in the second quarter, from 1 billion euros a year earlier, in line with analysts' estimates.

"Price wars on short haul routes especially in Germany and Austria as well as rising fuel and maintenance, repair and overhaul (MRO) costs burden results," the group said.

Group revenues rose by 4% to 9.6 billion euros in the past quarter.

As it announced in June, Lufthansa expects to report a low single-digit percentage increase in total revenues and an adjusted EBIT margin of 5.5% to 6.5% in full-year 2019.

By comparison, the group's second-quarter adjusted EBIT margin was 7.8%, down from the 10.8% the previous year.

"With neither Lufthansa nor Ryanair showing any sign of backing down in the German short haul market fare war, the balance of risks to estimates remains on the downside in the near term," analysts at Liberum said.

As a result, the shares are suffering - down 5.5% after these announcements.

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