Lufthansa reports year-on-year decline in third-quarter operating profit

German airline group Lufthansa announced a year-on-year decrease in its operating profit for the third quarter, citing challenges such as low yields, increased competition from international airlines, and rising costs.

The third-quarter operating profit of 1.3 billion euros ($1.41 billion) was largely in line with the expectations of analysts polled by the company, but 9% lower than a year earlier, News.Az reports, citing foreign media.

"Delayed aircraft deliveries, punctuality issues at our hubs in Germany and regulatory disadvantages are impacting our core brand," CEO Carsten Spohr said in a statement.

The third quarter, which includes the busy summer months for travellers, is usually the strongest for European airlines. But rising costs, unpredictability tied to the crisis in the Middle East and plane delivery delays continue to weigh on results.

Lufthansa's passenger airlines, which include its namesake brand as well as carriers such as Austrian Airlines, Swiss International and Eurowings, generated an operating profit of 1.2 billion euros in the third quarter, down from 1.4 billion in the same period of 2023. The decline was driven mainly by a 234 million euro decline in the result of its core brand Lufthansa Airlines, the company said in a statement.

In particular, the airline has repeatedly complained about its struggle to compete with Chinese carriers still able to fly over Russian airspace, prompting Lufthansa to suspend its Frankfurt to Beijing route.

The group has launched a turnaround programme at its core brand in an effort to recover after a difficult earnings year to date.

It has already issued two profit warnings this financial year, as it grappled with costs tied to strikes.

By 2026, the cost-cutting measures will have a gross effect on operating profit of around 1.5 billion euros, according to the company.

Lufthansa confirmed its outlook for the full year, targeting group operating profit in a range of 1.4 billion to 1.8 billion euros, and maintaining 8% as a mid-term target for its operating profit margin. Analysts have cast doubt on whether this can be achieved by 2026.

The profit margin for the 2024 financial year is expected at 4.3%, according to a company-led analyst consensus.

News.Az