logo
Share SHARE
FONT-SIZE Plus   Neg

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
Maternity leave is a temporary period of absence from employment granted to expectant or new mothers during the months immediately before and after their pregnancy. Parental leave, including maternity, paternity and adoption leave, is an employee benefit. Many countries around the world, including... Texas, the second largest state in the U.S., has four of the five fastest-growing cities in the U.S., according to new population estimates released Thursday by the U.S. Census Bureau for the twelve months up to July 1, 2016. Ten of the fifteen fastest growing large U.S. cities during that 12-month span were in the South, according to the Census Bureau. To book-lover's surprise, online retailer Amazon opened another bricks and mortar store in an upmarket shopping mall in New York. This is the seventh book store of Amazon.
comments powered by Disqus
Follow RTT