Germany′s Lufthansa airline slumps after weak profits | News | DW | 30.07.2019
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Germany's Lufthansa airline slumps after weak profits

German airline Lufthansa has reported sliding profits in the second quarter. Stiff competition from budget European carriers and rising operating costs are eating into the company's earnings.

Lufthansa said Tuesday its net profit fell to €226 million ($252 million) in April-June — a year-on-year drop of 70%, which was partly due to a €200-million tax provision.

The outlook was expected to remain gloomy at least until the end of the year, the Frankfurt-based airline said in a statement.

Fuel price increases, "persistent overcapacities" and "aggressive competition" from budget airlines in Europe, such as Ryanair and Easyjet, were taking their toll, the airline added. Economic prospects have also been tainted by global issues such as the US-China trade wars and Brexit.

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The Lufthansa Group, which includes budget subsidiary Eurowings and smaller carriers in alliances like Austrian and Swiss Air, said there had been a 7% increase in costs, including a fuel bill that had risen by €225 million since the 2018 second quarter.

Despite a shrinking bottom line, the company saw sales increase by 4% to €9.6 billion compared to the same time last year.

Lufthansa said long-haul flights, particularly to Asia and North America, continued to turn a profit, while no frills Eurowings was struggling in the tough European market.

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Chief Financial Officer Ulrik Svensson said the group was fighting particularly hard in Germany and Austria, and planned to take on the competition by "further reducing our costs and increasing our flexibility."

"We intend to make Eurowings a sustainably profitable airline," he added.

Frankfurt's benchmark DAX 30 index tumbled 1.5% in early afternoon on Tuesday, while Lufthansa slid 6% after making its announcement.

Last month, Lufthansa CEO Carsten Spohr slashed its adjusted earnings forecast for this year to €2 billion to €2.4 billion, down from the previous estimate of €2.4 billion to €3 billion.

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nm/jm (AFP, Reuters, dpa)

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