Deutsche Lufthansa (ETR:LHA) reported record second-quarter revenue but lower earnings as higher fuel costs, labor disruptions and aircraft-delivery delays weighed on results. Management said demand remained strong, particularly in premium cabins, Asia routes and cargo, while the company narrowed its full-year earnings outlook amid fuel-market volatility and shorter booking windows.
Revenue rose 8% year over year to €11.1 billion in the second quarter, driven by higher passenger revenue despite a more than 3% reduction in capacity. Chief Executive Officer Carsten Spohr said the quarter underscored resilient travel demand even as geopolitical developments and the Middle East crisis increased operating complexity and costs.
Fuel costs and strikes pressure profitability
Chief Financial Officer Till Streichert said fuel costs rose 40% in the second quarter, creating an additional expense of roughly €750 million from the prior-year period. For the Network Airlines, the fuel-price effect totaled €658 million, though stronger unit revenue helped recapture about 60% of the increase.
Streichert said adjusted EBIT declined €490 million year over year to €883 million, while citing an adjusted EBIT margin of 3.4%. The company said strikes by unions representing cabin and cockpit personnel at its mainline operations had a directly measurable financial impact of €150 million.
Spohr said Lufthansa had returned to constructive discussions with both unions and did not expect further strike disruptions during the summer. He said productivity improvements and agreements with labor representatives were necessary to halt the downsizing of Lufthansa’s core airline operations.
Capacity at the Network Airlines declined 3.3% during the quarter, reflecting strikes, Middle East-related flight cancellations and the continued restructuring of the continental network. The group discontinued its least-profitable short- and medium-haul routes, representing around 1% of total capacity, and accelerated the wind-down of Lufthansa CityLine.
Spohr said the CityLine shutdown and removal of 23 CRJ900 aircraft would produce an annual earnings improvement of approximately €180 million. He clarified during the question-and-answer session that the figure represented savings and improved profitability rather than costs from the closure.
Fleet transformation remains constrained by delays
Lufthansa received six aircraft in the second quarter, below the 11 originally planned. It now expects 41 aircraft deliveries for the full year, down from a previous projection of 45. Management said delivery delays were occurring during the group’s largest fleet modernization program.
The company has 100 aircraft deliveries planned over the next 100 weeks, though Spohr cautioned that some could again arrive later than scheduled. Lufthansa expects its fleet transformation to support a more efficient long-haul operation by 2028.
Streichert said the Lufthansa Airlines turnaround program remained on track to generate at least €1.5 billion in cumulative gross EBIT effects by the end of 2026. The program includes fleet and product renewal, shifting capacity into lower-cost operating units and more than 700 productivity and efficiency initiatives.
Lufthansa City Airlines more than doubled its aircraft count from the prior year to 18 this summer, according to Streichert. Spohr also said Discover Airlines and Lufthansa City Airlines added nine aircraft during the first half.
Cargo and maintenance units support group earnings
Lufthansa Cargo delivered a stronger quarter as supply-chain disruptions and demand for technology equipment supported yields. Revenue exceeded €1 billion, while adjusted EBIT increased €42 million to €160 million, representing an 11% operating margin.
The company said yields to Asia and on its intra-Asian routes rose 30%, while Middle East yields increased even more strongly. Spohr said demand to transport IT server equipment and server racks linked to AI-related data-center investment had become a highly profitable opportunity, particularly for freighter aircraft.
Lufthansa Technik reported revenue growth of 11% to €2.2 billion, with external business increasing 21%. Adjusted EBIT was €157 million. Management said the unit faced short-term pressures from lower airline flight activity, delayed heavy maintenance checks and continued shortages of engines, components and spare parts, but maintained its 2030 target of €10 billion in revenue and €1 billion in profit.
In the point-to-point segment, Eurowings achieved a 9.4% increase in RASK despite a 6.5% capacity reduction. However, higher fuel, maintenance, catering and cockpit-crew costs resulted in a break-even result. Including Lufthansa’s 50% stake in SunExpress, the Point-to-Point segment reported a €37 million loss in the quarter.
Guidance reset amid uncertain second-half conditions
Lufthansa now expects full-year 2026 adjusted EBIT of between €1.7 billion and €2.2 billion. The company also expects capacity to be broadly flat year over year, compared with its earlier forecast for growth of 0% to 2%.
Streichert said second-half bookings were increasingly being made under the stronger post-crisis pricing environment, with current booking yields running about 5% to 12% above prior-year levels. Load factors were still a few percentage points below last year, however, making the pace at which those gaps close a key factor for second-half performance.
- Management expects a mid- to high-single-digit RASK increase in the second half to offset an estimated fuel headwind of nearly €700 million.
- The full-year fuel bill is now expected to be about €8.7 billion, including approximately €8.5 billion in fossil fuel costs and €0.2 billion tied to mandatory sustainable aviation fuel requirements.
- The group said it had hedged about 81% of its full-year fuel exposure and expected a positive hedge result of roughly €1.5 billion.
- Adjusted free cash flow guidance remained unchanged at approximately €0.9 billion, supported by expected net investments of around €2.5 billion.
Management identified jet-fuel prices, the pace of unit-revenue improvement, operational stability without further strikes and fourth-quarter cargo demand as the principal factors determining where earnings land within the updated guidance range.
About Deutsche Lufthansa (ETR:LHA)
Deutsche Lufthansa AG operates as an aviation company worldwide. It operates in three segments: Passenger Airlines; Logistics; and Maintenance, Repair and Overhaul Services (MRO). The Passenger Airlines segment offers products and services to passengers of Lufthansa Airlines, SWISS, Austrian Airlines, Brussels Airlines, and Eurowings. Its Logistics segment offers airfreight container management, urgent shipments, and customs clearance services; and e-commerce solutions. The MRO segment provides maintenance, repair, and overhaul services for civil commercial aircraft serving original equipment manufacturers, aircraft leasing companies, operators of VIP jets, government, armed forces, and airlines.
