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Lufthansa Q3 Profit Down, Sees Slightly Higher Q4 Unit Revenues; Stock Dips

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Shares of Deutsche Lufthansa AG (DLAKF,DLAKY) were losing around 3 percent in the morning trading in Germany after the airline reported Wednesday lower profit in its third quarter. Revenues, however, increased from last year. Looking ahead, for the fourth quarter, the company projects slightly higher unit revenues and a slight reduction in unit costs.

For the third quarter, net profit declined to 1.18 billion euros from last year's 1.42 billion euros. Earnings per share fell to 2.54 euros from 3.06 euros a year ago.

Earnings before interest and tax or EBIT was 1.40 billion euros, down from 1.81 billion euros a year ago. Adjusted EBIT, meanwhile, climbed to 1.52 billion euros from 1.15 billion euros last year. Adjusted EBIT margin went up to 15.5 percent from 13 percent a year ago, with all the Group's airlines, including Lufthansa Cargo, posting significant margin increases.

In the quarter, total revenue climbed to 9.81 billion euros from 8.83 billion euros in the prior year. Traffic revenue improved to 8.07 billion euros from 7.04 billion euros last year.

Unit revenues excluding currency factors were up 4.5 percent for the third-quarter period.

Unit costs excluding fuel and currency factors increased 0.2 percent increase mainly due to provisions for higher profit sharing payments of 1.1 percentage-points.

For the nine months, net income edged up 0.1 percent to 1.85 billion euros, adjusted EBIT climbed 52.7 percent to 2.56 billion euros and revenues grew 12.1 percent to 26.76 billion euros.

Carsten Spohr, Chairman of the Executive Board of Lufthansa, said, "We achieved another record earnings result in the first nine months of this year. A result that gives us the investment and growth capabilities we need to play an active part in the consolidation of the European airline market, and to continue to invest in the future of our company."

Looking ahead, Lufthansa expects fourth-quarter unit revenues to increase slightly on organic capacity growth of 5.5 percent. The financial burden of 100 million euros resulting from strikes in the fourth quarter of last year will not recur.

The company expects to see a slight reduction in unit costs excluding fuel and currency effects at its passenger airlines in the fourth quarter. Fuel costs, including Brussels Airlines, are expected to amount to circa 5.3 billion euros this year.

Aviation Services are expected to report an Adjusted EBIT for the year that is broadly on par with its 2016 level.

In Germany, Lufthansa shares were trading at 25.47 euros, down 2.73 percent.

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