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Lufthansa Stock Up As Q3 Net Profit Rises, Maintains FY19 View

Shares of Deutsche Lufthansa AG (DLAKF,DLAKY) were gaining around 9 percent in German trading after the airline maintained its fiscal 2019 forecast on Thursday following higher third-quarter net profit. EBIT, a key earnings metric, declined amid economic slowdown and higher fuel costs.

For fiscal 2019, the company continues to expect to report an adjusted EBIT of 2.0 billion euros to 2.4 billion euros with an adjusted EBIT margin between 5.5 and 6.5 percent. Total revenues for the year are expected to rise by a single-digit percentage amount. Fuel costs would be around 650 million euros higher than last year.

Carsten Spohr, Chairman of the Executive Board & CEO, said, "At Eurowings the turnaround measures are showing first results; and at Austrian Airlines, Brussels Airlines and Lufthansa Cargo we will be taking tangible corrective action to improve earnings."

Eurowings is expected to be back to profitability by 2021, and to achieve a margin of 7 percent in the longer term.

For the third quarter, Lufthansa Group's net profit grew 4 percent to 1.15 billion euros from last year's 1.11 billion euros. Earnings per share were 2.43 euros, higher than 2.34 euros last year.

The company said the third-quarter earnings were supported by continued strong business on North Atlantic routes. Unit costs were also substantially reduced in the third quarter, particularly at the Network Airlines.

EBIT, meanwhile, declined 13 percent to 1.22 billion euros and adjusted EBIT dropped 8 percent to 1.30 billion euros. The Adjusted EBIT margin stood at 12.7 percent, down from prior year's 14.1 percent.

Fuel costs for the period were 171 million euros above last year's level, primarily due to currency movements.

Eurowings' adjusted EBIT increased 39 percent from last year to 169 million euros.

Total revenues increased by 2 percent to 10.18 billion euros from prior year's 9.96 billion euros.

The company noted that slower growth at Group airlines and their competitors helps counter pricing pressures in Europe.

In Germany, Lufthansa Group shares were trading at 17.52 euros, up 8.45 percent.

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