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
Low-cost airline Allegiant Air announced its order for brand-new aircraft for the first time in its history. The carrier announced on Friday it had reached a deal to purchase 12 current-generation models of Airbus' A320 narrow-body jets. The company termed the deal as "another step towards Allegiant's... Los Angeles City officials have filed criminal charges against Soylent CEO Robert Rhinehart for placing a bright red shipping container on Montecito Heights hillside as part of his "experiment in sustainable living." City Attorney Mike Feuer Friday announced that his office has filed multiple criminal... A new study says that if Hillary Clinton is elected then her proposals will strengthen the U.S. economy and create millions of jobs. According to Moody's Analytics, Hillary Clinton's economic proposal would oversee a "somewhat stronger U.S. economy." The conclusion was reached after assessing her...
comments powered by Disqus
Follow RTT