Lufthansa's Q3 Operating Profit Declines Due to Brand Challenges

BERLIN - German airline group Lufthansa announced that its third-quarter operating profit decreased by 9% compared to the same period last year. The company cited issues related to its main brand, low yields, increased competition, and rising costs as contributing factors to the decline.

The group reported an operating profit of 1.3 billion euros ($1.41 billion), in line with analyst expectations but below last year's figures. The typically strongest third quarter for airlines, due to summer travel, was adversely affected by rising costs, the ongoing crisis in the Middle East, and delays in aircraft deliveries.

Notably, Lufthansa's flagship carrier experienced a significant drop in operating profit, which decreased by 234 million euros, bringing total profit for the passenger airline segment to 1.2 billion euros. This figure fell short of the 1.4 billion euros recorded in the same quarter of 2023.

In response to these challenges, Lufthansa has launched a transformation program aimed at revitalizing its main brand. The company estimates that the program will have a gross impact of approximately 1.5 billion euros on operating profit by 2026.

Despite the setbacks, Lufthansa maintains its year-end profit forecast of between 1.4 billion euros and 1.8 billion euros. The company is also targeting an operating profit margin of 8% in the medium term, although some analysts question the feasibility of reaching this goal by 2026.

According to the analyst consensus managed by the company, the profit margin for the 2024 financial year is projected to be 4.3%. As the aviation sector continues to grapple with a complex set of challenges, Lufthansa's financial performance and strategic initiatives are being closely monitored. The current exchange rate used by the company is 1 euro = 0.9251 $.