BERLIN (Reuters) - Lufthansa's operating profit dropped by over a third in 2024, the airline said on Thursday, capping a difficult 2024 during which spiralling costs, limited airspace and delivery
Lufthansa's 2024 Recovery and Promised Savings from Restructuring
By Rachel More and Joanna Plucinska
BERLIN (Reuters) -Lufthansa bounced back with a recovery in the second half of 2024 thanks to strong demand and lower fuel costs that lifted its shares on Thursday following a difficult year impacted by costly strikes and industry-wide delivery delays.
Despite falling by over a third on the previous year, operating profit of 1.6 billion euros ($1.73 billion) in 2024 was still slightly above forecasts, driven by a stronger-than-expected fourth quarter which Deutsche Bank analysts said was "a decent end to the year".
Shares in the German group, which has promised to cut costs at its loss-making core brand Lufthansa Airlines in the coming years, were trading 6.8% higher at around 0925 GMT.
European airlines, including Lufthansa rival Air France-KLM, struggled last year as inflation and maintenance of ageing fleets drove costs higher despite sustained strong demand, with shares dropping for most of the main carriers on the continent.
"Looking back, 2024 was a year of two halves for the Lufthansa Group. In the first six months, we still had to cope with a significant decline in operating profit," Chief Executive Carsten Spohr said in a statement.
But the airline managed to bounce back in the second half of the year, Spohr said.
Lufthansa reported adjusted earnings before interest and taxes of 468 million euros in the last three months of 2024, beating a company-provided consensus estimate by 14%.
The second half got a huge boost from lower fuel prices and benefitted from ongoing demand, particularly in the lucrative transatlantic market, Spohr said.
This helped the group to regain ground after a series of strikes that pushed up costs with sweeping flight cancellations and later higher wage agreements.
Promising a "year of transition" in 2025, the group said the restructuring programme at Lufthansa Airlines was expected to make a gross profit contribution of around 2.5 billion euros by 2028.
The namesake airline slipped into the red in 2024 with an operating loss of 94 million euros.
The cost-saving measures would not yet take full effect in 2025, the company said, but it nonetheless guided for "significantly higher" operating profit this year.
The group's newer City Airlines carrier was being deployed effectively for short-haul travel around Europe, the company said.
($1 = 0.9252 euros)
(Reporting by Rachel More and Joanna Plucinska; Editing by Tom Hogue, Miranda Murray, Rachna Uppal and Tomasz Janowski and Elaine Hardcastle)
