Lufthansa on course for rebound, outlook clouded by Ukraine crisis

Lufthansa on course for rebound, outlook clouded by Ukraine crisis
Published - Mar 3, 2022 @ 4:11 PM (EET)

Germany's Lufthansa (IBIS:LHA), which narrowed its losses but remained delinquent, said it could not provide a detailed outlook for 2022. It said that the war in Ukraine will obscure prospects for a long-awaited recovery from the coronavirus pandemic amid rising fuel prices and stalled flights.

As Covid curbs eased, Europe's biggest airline cut its annual loss by two-thirds in 2021. For its fourth quarter of last year, Lufthansa booked a net loss of $394.2 million, lower than the $1.26 billion loss it posted the year prior.

Although earnings this year should show further improvement, Chief Executive Carsten Spohr of Lufthansa said, "We are very certain that air traffic will experience a strong upswing this year," with the Russian assault making it impossible to provide an estimate.

Following a challenging first quarter of 2022, the airline expects significant improvement in operating results for the rest of the year, and said booking for the coming Easter and summer vacations almost reached pre-pandemic levels.

Demand is also particularly strong for destinations in the U.S. and the Mediterranean, the carrier said, with short- and medium-haul routes almost back to normal.

Lufthansa is the first major carrier to provide an earnings update since the extent of disruption from the invasion became clear. Airlines are bracing for potentially lengthy blockages of key east-west flight corridors and preparing for further disruptions to their freight and passenger businesses.

Lufthansa further warned that increasing external costs would affect the entire airline industry this year. Currently, the carrier is hedged on 63% of its fuel needs for 2022 at $74 a barrel.

Lufthansa Group, which includes Eurowings, Austrian Airlines, and Swiss, plans to offer more than 70% of its pre-crisis capacity this year, rising to 85% for the summer.

On Thursday, shares of the company slipped 3.9%.

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