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German airline group Deutsche Lufthansa on August 3 said it expected high demand for travel, especially in premium classes, to continue for the rest of the year as it reported a jump in second-quarter revenue and profits.
Bookings for August to December were on average at more than 90 per cent of pre-pandemic levels, prompting Lufthansa to expand its capacity to 88 per cent of the 2019 level in the third quarter, the group said.
Airlines have benefited from a boom in leisure travel since the easing of Covid-19 restrictions, though there has been concern that the surge in demand – and resulting strong earnings – could lose momentum in the autumn season as high inflation starts to squeeze passenger spending.
Lufthansa rival IAG last month said it was “mindful” of uncertainty in the wider economy, even as it reported consensus-beating quarterly profit, and Ryanair was cautious on demand for the rest of 2023.
Lufthansa, which owns the Austrian Airlines, SWISS and Eurowings carriers, seemed more upbeat on the market outlook, saying it was returning two more A380s to scheduled service this year, with more to follow along with new Boeing 787s and Airbus A350s in the coming year.
Air France-KLM revised up its forecast for costs this year due in part to inflationary pressures, taking the shine off higher than expected quarterly earnings on Friday. Although fuel prices have fallen, the carrier said overall unit costs would increase by a low single digit percentage in 2023 versus 2022 due to factors including higher salaries and a previously downgraded capacity estimate.
On long-haul routes, it said the increase in capacity would primarily come from the expansion of connections to Asia, given the re-opening of major markets such as China and Japan. In April to June, Lufthansa’s adjusted earnings before interest and tax nearly tripled to 1.09 billion euros (USD 1.19 billion), slightly above consensus for 1.04 billion, from 341 million a year earlier.
For the full year 2023, it now expects adjusted EBIT to come to more than 2.6 billion euros, having previously forecast a significant increase from last year’s 1.5 billion.
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