Lufthansa Group is navigating through turbulent times as the airline posted a seasonal operating loss of €722 million in the first quarter, despite stable performance from subsidiaries and solid European business. The company faces mounting obstacles that could impact its ambitious goal of significantly exceeding last year’s operating profit of €1.65 billion. Particularly concerning are signals from the crucial transatlantic market, where bookings for cheaper tickets in the third quarter have noticeably declined. Executives suggest this reluctance may stem from aggressive U.S. policies deterring European travelers. Adding to these woes, 15 brand-new Boeing 787 aircraft remain grounded in the United States due to regulatory approval issues, potentially hampering the airline’s vital expansion plans scheduled for autumn.
German Policy Compounds Competitive Disadvantage
The German government’s decision to maintain the drastically increased aviation tax further undermines Lufthansa’s position. Despite earlier promises to reduce this burden, budget constraints have led to projected 2025 tax revenue of €2.05 billion from the aviation sector. This policy shift exacerbates Germany’s status as Europe’s most expensive aviation hub, with airport costs having risen 38% since 2019—significantly above the European average of 26%. The consequences are already visible as carriers like Ryanair reduce German operations, citing prohibitive costs. For investors, this fundamentally alters the outlook as Lufthansa must continue shouldering structural competitive disadvantages while European rivals benefit from more favorable conditions.
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