Lufthansa Cuts Winter Flights As Fuel Costs Soar

Lufthansa Cuts Winter Flights As Fuel Costs Soar

Lufthansa Cuts Winter Flights As Fuel Costs Soar

Lufthansa joined other airlines in reporting results battered by high fuel costs, and said capacity would not grow as quickly as previously planned over the winter.

Fuel costs rose 24.6 percent to EUR€3 billion (USD$4.3 billion) in the first half, Lufthansa said in its interim report on Thursday.

However, it has reduced its forecast for expected fuel expense in 2011 by EUR€100 million to EUR€6.4 billion, according to presentation slides.

While air travel has picked up after the 2008/2009 global downturn, fuel costs, political unrest and a drop in traffic caused by the March 11 Japanese earthquake and tsunami are causing headaches for airlines across the world.

Late on Wednesday Air France-KLM posted a EUR€212 million quarterly net loss, while in the US, shares in Delta Air Lines fell to a year low after it said fuel costs grew at a higher rate than revenue.

Deutsche Bank analyst Michael Kuhn said Lufthansa’s first-half results fell short of his and consensus expectations.

“We think it will be crucial how the company comments on what has impacted the second quarter, and how those factors are expected to develop in H2,” he wrote in a note.

Lufthansa said late on Wednesday it had scraped a small operating profit of EUR€3 million in the first half of the year and confirmed guidance for a rise in 2011 revenue and operating profit.

On Thursday it promised “extensive restructuring, where necessary” as it reported that UK airline bmi is unlikely to improve its operating result this year.

“Demand on the Japanese routes has begun to recover, which we see as grounds for optimism,” it said.

The company said it would increase capacity on its winter timetable by 6 percent, rather than 12 percent, by postponing new routes, cutting back flights, and as a result of discontinuing Lufthansa Italia.

(Reuters)



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