Deutsche Lufthansa AG urged patience after last year’s profit decline, forecasting a rebound as turnaround efforts take hold and rising demand lifts revenue. 

Europe’s largest airline group delivered a 39 per cent drop in adjusted earnings in 2024, with margins at just half its 8 per cent target. Lufthansa blamed high personnel costs, aircraft delays, and rising competition from the Middle East and Asia. The carrier expects cost-cutting moves and strong demand to drive a sharp earnings rebound this year.

“Nevertheless, current challenges will persist,” Lufthansa Chief Financial Officer Till Streichert said in an earnings statement, pointing to delays in aircraft deliveries and rising costs. “We therefore regard 2025 as a transition year” toward higher profit.  

Lufthansa’s profit slump follows a pledge to permanently boost profitability after the pandemic. The carrier’s namesake airline is the responsible for many of the issues, suffering from high labor costs and costly flight delays and cancellations, particularly at its Frankfurt and Munich hubs. 

Lufthansa has initiated a savings plan as stiff competition drives down fares, and corporate travel hasn’t rebounded fully from the pandemic. The carrier has eliminated its direct daily flight from Frankfurt to Beijing because the airline is deploying fuel-guzzling, older aircraft on that service that are making that route unprofitable.

The airline also put two senior executives in charge of improving performance at its main Frankfurt and Munich hubs after operations during peak travel seasons were plagued by delays and disruptions that resulted in angry passengers. 

The difficulties at its flagship were a drag on the airline group’s adjusted earnings margin, which was 4.4 per cent for 2024, below a strategic target of 8 per cent. Lufthansa had previously revised its full-year outlook in July, saying at the time that breaking even at the German unit will be “increasingly challenging” in 2024.

Other European airlines have posted mixed results in recent months. International Airlines Group SA, the owner of British Airways, reported record profits in 2024, buoyed by strong demand for transatlantic travel. However, Air France-KLM on Thursday posted a 6 per cent drop in operating income for the year. 

Budget carrier Wizz Air has also struggled, reporting a €237.9 million quarterly loss in January, citing aircraft groundings due to engine issues as a key factor.

Analysts warn that economic uncertainty, high costs, and ongoing operational challenges could create further turbulence for European airlines in 2025. While demand remains resilient in some segments, particularly premium travel, airlines face pressure from fuel prices, labor costs, and geopolitical factors affecting airspace availability.

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