Lufthansa posts record profits as ticket prices soar

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Lufthansa has forecast continuing post-pandemic travel demand and high ticket prices for the remainder of the year as it reported record profits.

The German flag carrier said on Wednesday it expected its yield — the average amount of revenue received per passenger by mile — to climb further in 2023, even when compared with “the record level of the previous year”.

The group’s adjusted earnings before interest and taxes reached €1.1bn in the second quarter of the year, a 177 per cent increase compared with the same period last year and a record for the company.

Lufthansa, which includes the Eurowings and Swiss carriers, transported more than 55mn passengers between January and June, an increase of about a third from 2022, but still short of 2019 levels because of widespread staff shortages in the sector.

Lufthansa’s chief executive Carsten Spohr on Wednesday said the company had been hiring an average of 1,000 new employees per month in 2023, as it expected results this year to be “one of the three best in the history of the Lufthansa Group”.

However, the company said capacity offered by its airlines would be at the lower end of its previous forecast range because of the “persisting bottlenecks in the European air traffic system”.

Strong demand coupled with the supply constraints have allowed airlines to charge higher prices, with the rising average cost of flight tickets outpacing inflation.

The profit rebound represents a sharp reversal of fortunes for the industry. Three years ago, at the onset of the pandemic, Spohr had warned the company would emerge significantly smaller. It was then burning through €1mn an hour, as passenger numbers slid to just 1 per cent of their usual capacity in the wake of lockdowns and travel restrictions.

The crisis spurred the German government to offer Lufthansa a €9bn bailout package, amid wider concern for the future of the airline industry. Lufthansa has since repaid the money, and Berlin has sold the 20 per cent stake it took in the company.

The group said that more than 265,000 customers had booked its “Green Fares”, a separate flight tariff that includes compensation for flight-related CO₂ emissions, which it introduced in February.

Surging demand for flights comes as regulators put pressure on the industry to reduce its annual CO₂ emissions, which make up 2.4 per cent of CO₂ emissions across all sectors. Strengthened EU rules designed to tackle aviation emissions are also expected by analysts to put pressure on ticket prices for air travel.

Lufthansa’s shares slid 6 per cent on Thursday morning. Analysts at Deutsche Bank said that investors were likely to be disappointed by rising costs eating into higher margins. Although higher ticket prices would cover the cost inflation, higher prices charged by airports and surging maintenance costs meant that the cost of transporting passengers had risen 7 per cent compared with last year, they added.

The company said that, thanks to the rebound in long-haul flight demand, it planned to return to service two more Airbus A380s — the world’s largest double-deck passenger carrier — this year. It added it would introduce new Boeing 787s and Airbus A350s next year.