Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

Lufthansa warns on profit, shares plunge

Send a link to a friend  Share

[June 11, 2014]  FRANKFURT (Reuters) - Germany's Lufthansa said it would not reach its profit targets for the next two years as competition suppresses prices on its main European and U.S. routes and as it struggles to make up for the effect of pilot strikes.

Its shares plunged as much as 11 percent after the statement on Wednesday, heading for the biggest one-day drop since 2001.

Europe's largest airline by revenue said it now expects 2014 operating profit of 1 billion euros ($1.4 billion), against a previous forecast of 1.3-1.5 billion. It also reduced its 2015 earnings target to 2 billion euros from 2.65 billion.

"The revenue risks mentioned when we presented the quarterly figures in early May have unfortunately materialized," Chief Financial Officer Simone Menne said.

In May it said market conditions were tough and that yields - a measure of revenue per passenger - were coming under pressure at its Frankfurt and Munich hubs.

Menne said on Wednesday that prices on European and U.S. routes were under pressure due to more seats being offered by rivals, such as those from the Gulf region.

Lufthansa has long been a critic of airlines such as Emirates [EMIRA.UL], Qatar Airways and Etihad, which it says enjoy competitive advantages because they are state-owned.

The profit warning comes just over a month into the tenure of new chief executive Carsten Spohr.

He will present details of further restructuring measures in July, the company said.

Lufthansa will also "noticeably" reduce the number of seats it offers over the winter, Menne said.

The company said three-day pilot strikes in April had wiped 60 million euros off its profit for the year, while currency restrictions in Venezuela preventing airlines from repatriating revenues from ticket sales there had lowered results by a further 60 million euros.

(Reporting by Victoria Bryan; Editing by Ludwig Burger and Jason Neely)

[ 2014 Thomson Reuters. All rights reserved.]

Copyright 2014 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

< Top Stories index

Back to top