European Airline Stocks Shaken as Lufthansa Cuts 2019 Profit Forecast
Germany’s largest airline Lufthansa has cut its full-year profit forecast, which has negatively affected airline stocks throughout Europe, Reuters reports Monday, June 17.
In its official statement, Lufthansa cut its annual EBIT forecast from the earlier target of 2.4–3 billion euro down to 2–2.4 billion euro. The change in projected profit is closely related to falling ticket prices and increasing fuel costs.
The airline has stressed that the pressure is particularly hard for its low-cost subsidiary Eurowings, which is expected to face an EBIT margin between -6% and -4% instead of the previously projected 0%.
Lufthansa’s shares were hit immediately after the announcement, losing over 12% on the day. As of press time they are trading at €15.53, a two-year low.
In May, low-cost airline Ryanair reported its lowest profit in four years. The Irish carrier predicted another profit slide in 2019, as its fares went down against the background of Brexit uncertainty and harsh competition between European airlines.
On June 11, Air France KLM posted a first-quarter loss, despite the fact that its passenger count rose 3.3% against last year.
In early June, the International Air Transport Association (IATA) announced a downgrade of its 2019 forecast for the global combined air transport industry profit to $28 billion. The drop from a December 2018 estimate of $35.5 billion is based on falling demand and rising fuel costs.
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