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Lufthansa reports loss as fuel costs rise and overcapacity weighs

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Lufthansa reports loss as fuel costs rise and overcapacity weighs
FILE PHOTO: A Lufthansa Airbus A321-100 airplane takes off from the airport in Palma de Mallorca, Spain, July 29, 2018. Picture taken July 29, 2018. REUTERS/Paul Hanna/File Photo   -   Copyright  Paul Hanna(Reuters)
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BERLIN (Reuters) – Lufthansa reported an operating loss of 336 million euros (£290.4 million) for the first three months of the year, hurt by rising fuel costs and overcapacity in Europe, sending its shares down 5 percent in pre-market trade.

Germany’s biggest airline said late on Monday that a 202 million euro rise in fuel costs had contributed to the loss, while unit revenues at Lufthansa’s airlines, which include SWISS and Austrian Airlines, as well as budget carrier Eurowings, fell significantly in the period.

The fall in earnings was accentuated by a tough comparison with the previous year when Lufthansa benefited from lower capacity due to the insolvency of Air Berlin, it said.

Lufthansa reported an operating profit of 52 million euros for the same period a year earlier.

Shares of the airline, which have risen around 12 percent since the start of the month, were indicated to open 5.1 percent lower in premarket trade on Tuesday morning at 0606 GMT.

Lufthansa’s loss follows a bleak trading update from British rival EasyJet, which said on April 1 it expected to report a 275 million pound loss in the six months to the end of March.

European airlines are battling overcapacity and high fuel costs, while uncertainty around Brexit has led to some travellers to delay booking summer holidays.

Iceland’s WOW air was the latest casualty in March, halting operations and cancelling all future flights after failing to raise more funds.

Lufthansa said it expects revenues in constant currency terms to improve in the second quarter as booking levels recover, adding that for 2019, it still expects to make an adjusted operating profit margin of 6.5-8.0 percent.

Lufthansa is due to publish detailed results for the first quarter on April 30.

(Reporting by Caroline Copley; Editing by Uttaresh.V and Louise Heavens)

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