Lufthansa said passenger fares are set to erode further this year as it grapples with unions over a restructuring of European operations aimed at stemming the flow of customers to discount rivals. The shares fell as much as 7.1% yesterday.
Lufthansa’s yield, a measure that reflects average ticket prices, suffered the biggest drop in at least four years in the first quarter, while airline revenue declined almost 4%.
Europe’s third-largest airline, which is seeking to build its Eurowings discount arm into a rival for low-cost leaders Ryanair and EasyJet, said the intensity of competition and price pressure shows no sign of easing.
It reiterated that earnings will rise only “slightly” this year as weaker fares erode the bulk of €1bn in savings from lower fuel expenses.
“We’re looking into every single cost item and also ongoing projects,”said chief financial officer Simone Menne, adding Lufthansa also has “less visibility” over second-quarter bookings as people delay travel in the aftermath of the Brussels terror attacks.
Union talks have been more constructive recently, though there has been no breakthrough yet, she said.
Shares fell as much as 97c to €12.76 in Frankfurt, extending their decline this year to 12% and valuing the group at €5.92bn.
Lufthansa has split airline operations into two, as it aims to turn around with the expansion of Eurowings.
A €237m fuel-saving helped the firm pare its adjusted loss before interest and tax to €53m in the first quarter, from €167m a year earlier.
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