Lufthansa has become the latest European airline to reveal it is suffering financial turbulence and said it would make a €336m (£290m) loss for the first quarter of 2019.
The German group said a combination of excess seat capacity across the industry and rising fuel prices had impacted its earnings, turning the €52m profit it made for the same period last year into an unexpectedly high negative.
Its latest guidance added another €150m to the loss that Lufthansa forecast last month when unveiling full-year results.
Lufthansa’s quarterly jet fuel bills alone have risen by €202m in a year. Although overall revenues increased by 3% to almost €8bn in the first three months of 2019, its income per passenger dropped, with more planes in the air across Europe driving down fares on its short- and medium-haul flights.
The losses at the group, which includes Swiss, Austrian Airlines and Eurowings as well as the German national carrier, follows a profit warning from easyJet, which said earlier this month it expected profits for 2019 to be hit by falling demand and blamed economic uncertainty and fears over a no-deal Brexit for deterring passengers from booking.
Ryanair also issued two profit warnings over the winter, highlighting overcapacity in the market as fares stayed lower than anticipated.
In mitigation, Lufthansa said its ailing winter figures compared to an unusually strong 2018, when it was boosted by the collapse of its domestic competitor, Air Berlin. It said it still expected full-year profits to remain in line with guidance, with strong bookings for the next three months.
Airlines expect capacity to be reduced across Europe in 2019. As well as the failure of some small airlines such as Wow, the bigger carriers – including Lufthansa – have curbed some expansion plans.
The continued grounding of the Boeing 737 Max aircraft after the disasters in Indonesia and Ethiopia will also reduce capacity for Lufthansa competitors operating the plane, such as Turkish Airlines and Tui, and could eventually delay expansion at Ryanair, which has 135 of the Max models on order.
Ulrik Svensson, the chief financial officer of Lufthansa Group, said: “We are seeing good booking levels for the quarter ahead. At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter.”
He added: “This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.”
Lufthansa shares bounced back from an initial 4% fall in early trading on the Frankfurt exchange and were slightly up on the day at lunchtime on Tuesday.