Lufthansa downbeat on profits as terror attacks deter travellersComments
A gloomy outlook from Lufthansa for its vital summer season as terrorist attacks in Europe deter travellers.
In 2017, the focus will be on cost efficiency and not growthLufthansa's CEO
The German airline said there has been a fall in bookings from Asia and the United States due to travel warnings, though business travel is holding up.
Its cargo division is also set to post a loss this year because of overcapacity.
Lufthansa predicted its 2016 earnings before interest and tax will be below last year’s and said the priority right now is reducing costs by between two and three percent in the second half of the year.
“With the recent market developments, the importance of efficiency gains is prioritised,” chief executive Carsten Spohr said. He added: “In 2017, the focus will be on cost efficiency and not growth.”
In the first half of 2016, unit costs fell 1.3 percent. Lufthansa has agreed a new pay and pensions deal with cabin crew but is still in talks with its pilots.
That process was already underway in response to competition from budget carriers and fast-growing rivals such as Emirates and Turkish Airlines.
The period from July to September is traditionally when European airlines make most of their money due to the summer holidays.
Other major carriers have also cut back on planned growth.
Last week Air France-KLM said it was concerned about France’s attractiveness as a destination, while British Airways owner IAG gave a cautious outlook for the year.
Lufthansa’s shares, down almost 30 percent this year, dropped over three percent on Tuesday.