Lufthansa targets profit growth as strong start cushions slump
Lufthansa stuck to its forecast for higher earnings this year as a strong start to 2016 will help the German carrier offset a series of headwinds to travel demand. “The guidance remains what it is,” CEO Carsten Spohr said Monday. “We have a little bit of a buffer from the first months of the year, when performance was better than planned.” Lufthansa forecast that adjusted earnings before interest and taxes this year will be “slightly higher” than 2015’s E1.82b ($2b). Analysts have lowered their expectations for the company in recent weeks and are now predicting adjusted Ebit to fall to E1.77b, according to estimates compiled by Bloomberg. In addition to tourists wary after recent terror attacks, the UK’s vote to leave the EU has raised concerns about recession hitting travel demand. Airlines have been hard hit by the uncertainty surrounding Brexit because of the volatility of demand. Ryanair CEO Michael O’Leary last week said the discount carrier would “keep lowering fares to keep people flying” following the pound’s drop. Immediately after the vote, British Airways owner IAG SA cut its 2016 earnings outlook because of the likely impact of exchange-rate changes. After Lufthansa flew 3.3% fewer passengers in May, “June was in line with expectations, not super,” said Spohr, who cut financial forecasts twice in 2014, his first year as CEO. After reaching a “satisfactory” result in a mediation with its cabin crew union, Spohr said he is “optimistic” Lufthansa will reach a deal with pilots by the end of this month in a conflict that has caused strikes since 2014. “Lufthansa’s biggest issue is the negotiations with the pilots, and Spohr sounded fairly confident on those today,” said Jochen Rothenbacher, an analyst at Equinet Bank AG in Frankfurt. “Reiterating the profit guidance is also a positive.”<br/>
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Lufthansa targets profit growth as strong start cushions slump
Lufthansa stuck to its forecast for higher earnings this year as a strong start to 2016 will help the German carrier offset a series of headwinds to travel demand. “The guidance remains what it is,” CEO Carsten Spohr said Monday. “We have a little bit of a buffer from the first months of the year, when performance was better than planned.” Lufthansa forecast that adjusted earnings before interest and taxes this year will be “slightly higher” than 2015’s E1.82b ($2b). Analysts have lowered their expectations for the company in recent weeks and are now predicting adjusted Ebit to fall to E1.77b, according to estimates compiled by Bloomberg. In addition to tourists wary after recent terror attacks, the UK’s vote to leave the EU has raised concerns about recession hitting travel demand. Airlines have been hard hit by the uncertainty surrounding Brexit because of the volatility of demand. Ryanair CEO Michael O’Leary last week said the discount carrier would “keep lowering fares to keep people flying” following the pound’s drop. Immediately after the vote, British Airways owner IAG SA cut its 2016 earnings outlook because of the likely impact of exchange-rate changes. After Lufthansa flew 3.3% fewer passengers in May, “June was in line with expectations, not super,” said Spohr, who cut financial forecasts twice in 2014, his first year as CEO. After reaching a “satisfactory” result in a mediation with its cabin crew union, Spohr said he is “optimistic” Lufthansa will reach a deal with pilots by the end of this month in a conflict that has caused strikes since 2014. “Lufthansa’s biggest issue is the negotiations with the pilots, and Spohr sounded fairly confident on those today,” said Jochen Rothenbacher, an analyst at Equinet Bank AG in Frankfurt. “Reiterating the profit guidance is also a positive.”<br/>
