Lufthansa hit by Q1 loss

Shares in Lufthansa fell 6% Tuesday after the German airline group dialled back on its growth plans because of “significant pricing pressures”.<br/>Lufthansa said it expected to increase capacity — based on the number of passenger jets it flies, and their frequency — by 6% this year, down from a previous forecast of 6.6%. The weaker outlook came alongside mixed Q1 results. Lufthansa swung to a net loss of E8m for the three months to March 30, compared with a E425m profit a year earlier, when it was boosted by the sale of its stake in JetBlue, the US carrier. On an underlying basis Lufthansa lost E53m in Q1, a better result than analysts had expected. However, investors were jittery partly because International Airlines Group, parent of British Airways, said on Friday that it had “moderated” its capacity growth for 2016 because of weaker demand following the Brussels terrorist attacks. Lufthansa shares are down more than 10% this year as it struggles to cut costs and battle competition from budget airlines in Europe, and Gulf carriers on medium and long-haul routes. Q1 figures, it said, were further hampered by “weak economies” in South America and fewer group travel tickets purchased by Chinese and Japanese customers. “The intensity of the competition and the resulting pricing pressures will not ease, not least because of the low fuel costs,” said Simone Menne, Lufthansa’s finance director. “This is why it is important that we continue to work consistently on our cost positions. We remain fully committed to our goal of reducing our unit costs this year net of fuel and currency impacts.” The group said that cargo was “bracing . . . for a challenging financial year” from overcapacity on transatlantic routes and low demand. It projected that underlying operating profit at the unit would be “significantly” below last year. Analysts were generally upbeat about the Q1 figures, however, given the momentum in Lufthansa’s efforts to contain costs.<br/>