Lufthansa faces nearly $2 billion in extra fuel costs amid Iran war
Lufthansa passenger plane lands at Frankfurt Airport. The plane flies over the Messeturm. The airline will release its quarterly figures on Wednesday.
Picture Alliance | Picture Alliance | Getty Images
Germany’s largest airline Lufthansa It said additional fuel costs of 1.7 billion euros (about $2 billion) were charged because the conflict in the Middle East created “tremendous challenges.”
In its first-quarter earnings published on Wednesday, the airline said it had hedged 80% of its jet fuel, expected to incur additional costs of 1.7 billion euros in 2026, and planned to offset this by cost-saving measures and increasing revenue from ticket sales.
Lufthansa’s adjusted EBIT growth in the first quarter rose to 612 million euros, while its revenue rose 8% to 8.7 billion euros ($10.2 billion) from 8.1 billion euros last year.
“In the first quarter, we achieved significant improvement compared to the previous year’s financial results,” said Lufthansa CEO Carsten Spohr. “But the ongoing crisis in the Middle East, combined with rising fuel costs and operational constraints, creates enormous challenges for the world as a whole, global air travel and our company.”
Europe faces jet fuel shortages due to the ongoing blockade of the Strait of Hormuz. Fatih Birol, head of the International Energy Agency, warned last month that the continent was weeks away from running out of supply.
As of the end of March, jet fuel prices increased by 103 percent compared to the previous month. International Air Transport Association.
Lufthansa has already grounded 20,000 short-haul flights in a bid to save 40,000 metric tons of jet fuel and eliminate unprofitable flights.
Meanwhile, other European airlines have also been hit by rising fuel costs. british carrier EasyJet It said it had taken on additional fuel costs of £25 million ($34 million) in March and its headline pre-tax loss for the six months to March 31 was between £540 million and £560 million.
The budget airline said bookings for the rest of the year were weaker than last year, with customers heading out later to book tickets. EasyJet hedged 70% of its summer fuel, leaving the remaining 30% vulnerable to volatile fuel prices.
IEA’s Birol stated that jet fuel demand will be 40% higher than in March as the busy travel season approaches. Middle Eastern refineries supply about 75% of Europe’s jet fuel.
“The rest comes from some major Asian countries with export restrictions, and Europe is now trying to buy it from the USA and Nigeria. If we cannot bring additional imports from these countries to Europe now, we will be in a difficult situation,” Birol said.
