DEMAND HELD. FUEL DID NOT.

The Lufthansa Group has reported second quarter revenue of €11.1 billion, up 8% on the €10.3 billion recorded a year earlier, alongside an Adjusted EBIT of €383 million against €870 million in the comparable quarter. The Adjusted EBIT margin contracted to 3.4% from 8.4%. Group net income fell to €123 million from €1.0 billion, a decline the company attributes to the lower operating result together with valuation effects and one-off tax effects in the prior year. Adjusted free cash flow was negative €365 million against a positive €138 million a year earlier.

The two principal drivers of the earnings decline are identified precisely. Fuel costs ran approximately €750 million above the prior-year level. Strike action imposed financial burdens of at least €150 million, including six strike days in April. Against those, the demand environment was strong: unit revenues at the network airlines rose 6.4% year on year, the network carriers’ load factor edged up to 81.6%, and yields on Asian routes ran more than 13% above the prior year.

Carsten Spohr, Chairman of the Executive Board and Chief Executive of Deutsche Lufthansa AG, said the quarter had been marked by multiple geopolitical crises and uncertainties, and that despite improvement in load factor and a significant increase in yield the group had been unable to fully offset the rise in fuel costs. He said continued strong global demand, primarily in the premium classes, had a particularly positive impact, and that investments in premium products including Allegris, Swiss Senses and the FOX service upgrade were beginning to pay off.

SEGMENT BY SEGMENT: WHERE THE DAMAGE FELL

The network airlines generated Adjusted EBIT of €137 million, €490 million below the prior year, with fuel costs alone up more than €600 million. Capacity was 3% lower than the comparable quarter, attributable to the April strike days and to group-wide optimisation of short-haul operations including the removal of CityLine’s flight operations from the schedule. Unit costs excluding fuel and emissions rose 3.1%, though the company notes that on the prior year’s capacity base the increase would have been approximately one percent — a distinction worth registering, since a unit cost rise driven by reduced denominator is a different problem from one driven by increased spending. The figure also includes an equity result €108 million below the prior year, largely from currency-driven valuation effects on lease liabilities at ITA Airways.

The point-to-point segment recorded Adjusted EBIT of negative €37 million, down €101 million, with fuel accounting for €71 million of the deterioration. Eurowings reduced capacity by 6% while unit revenues rose 9.4% on strong European business. The airline has temporarily suspended flights to the Gulf region, previously a growth area, in response to the Middle East crisis, redeploying capacity to Mediterranean routes. Unit costs excluding fuel rose 10.9%, driven by the reduced capacity together with higher maintenance expenditure and preparation costs for the introduction of the Boeing 737-8 MAX. The SunExpress joint venture contributed an equity result €29 million below the prior year on a challenging demand environment for Turkish routes.

CARGO AND TECHNIK: THE COUNTERWEIGHT

Lufthansa Cargo delivered the clearest positive movement in the group, improving Adjusted EBIT by €42 million to €116 million and achieving a margin above 11% in the quarter. Capacity rose 2%, including through the marketing of ITA Airways belly capacity, while yields rose 27% year on year against a backdrop of persistently high air freight demand. The result is consistent with the wider cargo picture WAN reported from IATA’s June data, in which global demand rose 8.5% year on year against capacity growth of 4.4%.

Lufthansa Technik grew revenue 11% to €2.2 billion, with revenue from external customers up 23%, and recorded Adjusted EBIT of €157 million against €149 million. Demand for maintenance, repair and overhaul services remains consistently high — a countercyclical characteristic of the MRO business, since fleet utilisation drives maintenance requirements regardless of whether the flying is profitable.

BALANCE SHEET AND THE SHIFT FROM AMBITION TO RANGE

Operating cash flow fell by approximately €600 million in the first half to around €2.3 billion, driven by the lower operating result and lower advance ticket payments at end of June owing to shorter booking cycles. Net investments were €1.0 billion against €1.6 billion, covering final payments for eight aircraft deliveries and advance payments for future additions. Adjusted free cash flow for the first half was €1.0 billion, roughly in line with the prior year. Net financial debt including net pension obligations stood at €8.3 billion at 30 June, in line with year-end 2025, with total available liquidity of €10.7 billion, likewise matching the year-end position.

The Group now expects Adjusted EBIT of between €1.7 and €2.2 billion for the 2026 financial year. Till Streichert, Chief Financial Officer, said the upper end of the range continued to represent a result significantly above the prior year and remained in line with the previous earnings ambition, and that the range reflected heightened uncertainty from kerosene price volatility and shortened booking cycles in the passenger business. He identified the growing volatility of fuel prices and considerably shorter booking cycles as making forecasting increasingly difficult. Full-year capacity is now expected in line with the prior-year level, and the forecast for Adjusted free cash flow of approximately €0.9 billion is unchanged.