Lufthansa has warned of a fall in third-quarter earnings due to higher wage costs and a squeeze on ticket prices. Airfares in Europe and Asia are plateauing or falling as the post-COVID travel boom loses steam, while airlines increase flights.
The company expects third-quarter yields, a measure of flight profitability, to decline by a single-digit percentage, and unit costs to rise similarly. CEO Carsten Spohr noted strong demand but highlighted intensified price pressure due to market-wide capacity growth.
Delays in aircraft deliveries are causing fleet management disruptions and higher repair costs for older planes. German staff wage increases, following strikes costing €100 million ($108 million) in the second quarter, are also impacting finances.
Lufthansa forecasts third-quarter adjusted EBIT below the previous year’s €1.5 billion due to challenges in its main-brand passenger business. Shares have fallen following the company’s profit target cut. Spohr aims to turn around fortunes with a restructuring program focused on modernization.