Breaking News
FONT-SIZE Plus   Neg
Share SHARE

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

Shares of Deutsche Lufthansa AG (DLAKY: Quote,DLAKF: Quote) 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.

Register
To receive FREE breaking news email alerts for Deutsche Lufthansa AG and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
A number of major retailers will be open on Thanksgiving for early Black Friday shopping events. Kohl's department stores will kick off Black Friday sales two hours earlier this year, at 6 p.m. Thanksgiving Day, while Macy's, Bon-Ton and Best Buy will open at the same time. J.C. Penney and Sears... Twitter Inc. has replaced its head of product Daniel Graf just six months after luring him over from Google, according to multiple reports. Graf, previously known for his work leading Google Maps, will retain his vice president of product title and work on Twitter's geolocation features, the Wall... LinkedIn Corp., the world's largest online professional network, said Thursday after the markets closed that its third quarter loss widened slightly from last year, as higher costs and expenses more than offset a 45% increase in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.