logo
Plus   Neg
Share
Email
Comment

Lufthansa Cuts Operating Profit Outlook On Weak Revenues; Stock Down - Update

Shares of Deutsche Lufthansa AG (DLAKY, DLAKF) declined around 13 percent on Frankfurt's Xetra, after the German aviation group trimmed its earnings forecast for fiscal 2014, citing weaker-than-expected revenue in the passenger as well as freight businesses. The firm also attributed the revision to strikes and devaluation of the Venezuelan Bolivar. The company also said it no longer believes to achieve its earnings target for 2015.

For fiscal 2014, the company now expects operating profit to be nearly 1 billion euros, or about 1.3 billion after adjustment for one-off effects.

Previously, the company was projecting an operating profit of 1.3 billion euros to 1.5 billion euros on a reported basis, and 1.7 billion euros to 1.9 billion euros after adjustment for one-off effects.

The company had already warned against increasing risks to the earnings forecast in the first quarterly reports. Above all, the company's American and European business has suffered from increasing excess capacity, which leads to falling prices on these routes.

Simone Menne, Chief Officer Finances and Aviation Services at Deutsche Lufthansa, said, "The revenue risks mentioned when we presented the quarterly figures in early May have unfortunately materialised. We will therefore noticeably reduce our capacities during the winter timetable period."

Menne added that strong capacity growth by state-owned Gulf carriers was a major concern, as they are advancing ever further into the European market, also by means of investments in European airlines.

Further, the strike by the "Vereinigung Cockpit" pilots' union in early April had a negative results impact of 60 million euros. In addition, impairments on receivables denominated in Venezuelan Bolivar impacted negatively by 60 million euros so far.

Further, for fiscal 2015, Lufthansa said it does not expect to achieve operating results forecasts, and now expects it to be about 2 billion euros, compared to 2.65 billion euros set earlier as part of the Score programme.

The company nonetheless intends to substantially increase its operating profit compared with the current year.

Menne added, "The current development underlines the importance of Score for the group. We are achieving a sustainable reduction of our unit costs and now aim to stabilize the revenue trends, in order to counteract an ever intensifying competitive situation."

In Germany, Lufthansa shares are losing 2.68 euros or 13.46 percent, and trading at 17.23 euros.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
BlackRock Inc., the world's largest asset manager, said it plans to speak with gun makers and distributors following public outcry after the Florida high school shooting that killed 17 people. BlackRock, which had $6.3 trillion in assets under management as of December 31, 2017, holds shares in gun makers Sturm Ruger & Co. Inc. as well as American Outdoor Brands Corp. An upgraded boarding in Southwest Airline will cost you more. The airline usually not assign seats to passengers, but one can choose from an open seat. The Upgraded Boarding will allow passengers to choose from A1 - A15 boarding positions. The cost for these positions would be $30, $40 and $50, depending on flight and route. This option can be availed from the ticket counter or gate. Citigroup Inc.'s co-head of mergers and acquisitions, Peter Tague, is leaving the company, according to media reports, citing people familiar with the matter. Tague has been co-head of Global M&A business at Citigroup since March 2012, alongside Cary Kochman and Mark Shafir. It was not immediately clear what Tague intends to do after he leaves Citigroup.
comments powered by Disqus
Follow RTT