Lufthansa profit hit as fuel costs surge

Lufthansa (LHAd) reported a steep decline in second-quarter core profitability as rising costs outpaced revenue growth. Adjusted earnings before interest and taxes fell to €383 million in the three-month period, down from €870 million a year earlier. The result highlights a sharp squeeze on margins despite an increase in passenger and cargo activity reflected in higher sales.

The airline’s revenue for the quarter rose 8% year over year to €11.1 billion. The combination of higher revenue and much lower adjusted EBIT indicates that additional costs, rather than demand weakness, were the main driver of the profit deterioration.

Lufthansa (LHAd) linked the profit slump primarily to higher jet fuel costs and labor disruptions. Jet fuel expenses increased amid a rise in oil prices connected to tensions in the Middle East, including the war in Iran. This environment has led to greater volatility in energy markets, pushing up operating costs for airlines.

Labor strikes also affected operations and added to the cost burden in the quarter. These disruptions contributed to reduced efficiency and higher expenses, compounding the impact of more expensive fuel on the group’s profitability.

Investors reacted negatively to the earnings release. In early trading after the announcement of the quarterly figures, Lufthansa shares fell 8.6%. The share-price move reflects market concern over the company’s ability to protect margins in the face of rising input costs and operational disruptions.

The results come against a backdrop of broader energy-market volatility that is affecting airlines across the industry. Oil prices have been supported by geopolitical tensions in the Middle East, increasing fuel costs at a time when carriers are also managing wage pressures and capacity planning. Lufthansa’s quarter illustrates how these factors are feeding through to financial performance, even as demand supports revenue growth.