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Lufthansa eyes stable margins, mid single-digit revenue growth in 2019

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Lufthansa eyes stable margins, mid single-digit revenue growth in 2019
Tail wings of planes of German air carrier Lufthansa are seen from a cafe bar at the airport in Frankfurt, Germany, February 12, 2019. REUTERS/Kai Pfaffenbach/File Photo   -   Copyright  KAI PFAFFENBACH(Reuters)
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FRANKFURT (Reuters) – Lufthansa forecast stable margins and revenue growth in the mid-single digits this year as it eyes cautious expansion in the busy summer months, manages costs and targets break even at its budget airline Eurowings.

Germany’s biggest airline, reporting an 11 percent decline in fourth-quarter operating profits, said it would focus on “quality” growth this year and reduce growth in its peak summer capacity to 1.9 percent.

“Nonetheless, group revenue should rise in the mid-single-digit percentage area,” Lufthansa said on Thursday, adding that cost savings would compensate for 650 million euros (£554.4 million) in extra fuel costs expected this year.

Lufthansa’s acquisition of Air Berlin removed a key competitor on its home market, but the cost of integrating the operation has hurt profitability and its share price, which has declined by 12 percent over the past 12 months.

Earnings before interest and tax (EBIT) fell by 11 percent to 378 million euros (£322.4 million) in the seasonally-quiet fourth quarter, Lufthansa said, just below a mean forecast of 397 million euros in a poll of analysts.

For 2018 as a whole, Lufthansa’s EBIT margin declined to 7.9 percent from 8.3 percent. The company, which employs more than 135,000 people, forecast a margin of between 6.5 and 8 percent in 2019.

At Eurowings, which took over large parts of Air Berlin’s aircraft fleet, management is targeting breakeven in 2019 “and with that a significant improvement compared to a year earlier”, Lufthansa said.

(Reporting by Douglas Busvine; Editing by Shri Navaratnam)

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