Key Takeaways
- Lufthansa’s Q3 profits exceed market expectations, boosting shares by over 6.5%.
- The airline remains positive for Q4 amid robust travel demand and cost management.
- CEO Carsten Spohr expresses confidence in the outlook for year-end and beyond.
Berlin, Germany–Lufthansa delivered a surprise to the market with a solid Q3 performance, backed by a summer of strong travel demand, defying expectations of a profit warning.
Analyst Perspectives
According to a Reuters report, Neil Glynn from AIR Control Tower noted the absence of a predicted profit warning, leading to a ‘relief rally’ in the airline’s shares.
Industry Resilience Amid Challenges
Despite rising living costs and geopolitical tensions, Europe’s airlines, including Lufthansa, have notched up record profits, though concerns linger over escalating oil prices and potential recession risks.
Financial Highlights
The report noted that Lufthansa’s adjusted EBIT rose 31% from last year, reaching €1.47 billion, slightly ahead of the €1.43 billion consensus.
Executive Optimism
In the report, CEO Carsten Spohr cited a promising booking outlook as a basis for positive expectations for the year’s result and future performance.
Share Performance
Following the earnings announcement, Lufthansa’s shares are on track for their most substantial daily gain since June 2022, recovering from a one-year low.
Travel Demand and Costs
The airline has seen sustained demand in both short-haul and long-haul segments, particularly in premium classes.
Per the report, costs have decreased by 0.9% compared to the previous year.
Future Projections
The report noted that Lufthansa anticipates a positive operating result in Q4, aiming for an adjusted group EBIT of over €2.6 billion for the year.
Seating capacity is expected to reach 95% of pre-pandemic levels next year.
Analyst Caution
Per the report, Bernstein’s Alex Irving suggests that Lufthansa’s cautious capacity restoration is a prudent strategy, especially with ongoing challenges in the corporate travel segment.
What We Think
Lufthansa’s upbeat report in the face of industry headwinds reflects the airline’s effective cost control and the enduring appeal of air travel.
Their careful approach to increasing capacity and a favorable booking outlook indicates a strategic path to sustained profitability.
With a cautious but optimistic forecast, Lufthansa seems well-prepared to navigate the complex market dynamics as it continues its post-pandemic recovery.
