Lufthansa scales back growth plans amid economic gloom

Lufthansa has become the latest European airline to announce a scaling back of growth plans in response to worldwide economic uncertainty, anxiety over terrorism and air traffic disruption. On Tuesday, the German group, which owns a series of European airlines including Swiss and Austrian Airlines, as well as its flagship Lufthansa brand, said it was scaling back the expansion of its winter timetable from 6 to 5.4%. It disclosed the change as it reported H1 adjusted earnings before interest and tax — a measure that excludes some accounting charges — had risen 13% to E529m, on revenues that were down 2.1% to E15b. After news of the revised growth plan, Lufthansa shares were down 2.4% in lunchtime trading in Frankfurt, at E10.41. They have now fallen by more than E1 since a profit warning on July 20, when the company sharply downgraded its forecast for full-year profits. Carsten Spohr, Lufthansa’s CE, warned that the industry had to prepare for a “difficult second half-year”. “The terrorist attacks in Europe and also the increasing political and economic uncertainties are having a tangible impact on passenger volumes,” he said. “The forward bookings, in particular for our long-haul services to Europe, have declined significantly. We expect the high pricing pressure to continue.” Under Lufthansa’s revised growth plans, it will operate one fewer long-haul aircraft and six fewer short-haul aircraft over the winter than it had previously intended. In the first half of the year, the airline’s improved performance was largely due to a 42% jump in earnings before interest and tax at the core Passenger Airline Group, to to E393m. However, sales at the division declined 2.9% to E11.3b as a result of a 6.6% decline in revenue per available seat kilometre, to 7.6 cents.<br/>