Lufthansa halts Eurowings capacity growth as fare war bites

Lufthansa halted capacity expansion at its Eurowings low-cost arm after the group’s Q1 margins were squeezed by rising fuel bills and overcapacity that’s sparked a Europe-wide fare war. Europe’s biggest airline is abandoning plans to increase capacity at Eurowings by 2% this year. Earlier this month, Lufthansa issued a profit warning that attributed a plunge in earnings before interest and tax on fuel prices, cheap airline tickets and tough comparisons with year-earlier figures. The decision to dial back growth at Eurowings comes after the German carrier in March said it would slow group capacity increases to 1.9% this summer from the 3.8% previously planned in an effort to bolster prices. Revenues for airlines across Europe have been crimped by a capacity glut and fuel-price squeeze that’s forced eight airlines out of business since the summer. “We are confident, though, that we will see a recovery in our unit revenues as early as the second quarter,” Lufthansa CFO Ulrik Svensson said. “Our confidence is based above all on our favorable booking levels for the months ahead.”<br/>