Lufthansa Group has posted its highest-ever annual revenue, but the ongoing conflict involving Iran is casting a long shadow over its 2026 outlook. The German airline group reported revenue of €39.6 billion for 2025, a 5% increase from the previous year, and operating profit rose 20%. Yet the company now warns that soaring jet fuel prices linked to the war in the Middle East will push annual profit below earlier forecasts.
In its first-quarter 2026 results, revenue climbed 8% year-on-year, but the figures were overshadowed by an additional €1.7 billion in fuel costs caused by volatile oil markets and the need to reroute flights away from conflict zones. The crisis has forced Lufthansa to cancel 20,000 short-haul flights through October, part of a broader industry trend that has seen global airlines scrap around 13,000 flights in May alone, according to Euronews.
Fuel Costs and Route Adjustments
The surge in jet fuel prices has become a primary concern for European aviation. Lufthansa expects the extra fuel burden to persist into 2026, with longer flight paths around restricted airspace increasing consumption, crew hours, and maintenance cycles. The company is focusing on fleet modernisation—investing in more fuel-efficient aircraft—to mitigate long-term risks, but the immediate impact of fuel volatility remains severe.
“We are satisfied with the first quarter,” said CFO Till Streichert. “At the same time, the current situation compels us to rigorously examine every lever available to reduce costs, improve efficiency and mitigate risks in order to maintain our ability to act decisively. Our annual profit will likely be lower than originally anticipated.”
The group has advised passengers to book holidays as early as possible to avoid further surcharges, as capacity reductions and higher operating costs are passed on. Lufthansa kept overall capacity broadly stable by shifting focus to long-haul routes, which partially compensated for cuts in short and medium-haul segments.
Resilient Demand and Diversified Strategy
Despite the headwinds, global demand for air travel remains strong. Lufthansa Group expects another robust summer travel season, buoyed by resilient consumer appetite. CEO Carsten Spohr highlighted the company’s ability to absorb shocks: “We are resilient in our ability to absorb these impacts. This applies both to our above-average hedging against fuel price fluctuations and to our multi-hub, multi-airline strategy, which provides us with greater flexibility in our route network and fleet development.”
Lufthansa Technik and Lufthansa Cargo also contributed significantly to earnings, with demand for maintenance, repair, and overhaul services rising, along with revenue from marketing ITA Airways’ cargo space. The broader European aviation sector is grappling with similar pressures, as the IMF warns Europe faces recession risk if the Middle East conflict prolongs, and US warnings of force against Iranian attacks on Strait of Hormuz shipping underscore the geopolitical instability affecting fuel supply chains.
The conflict has also disrupted global shipping, with UNHCR shipping costs rising and threatening refugee aid across Africa. For Lufthansa, the immediate challenge is clear: fuel price volatility remains the largest variable in its 2026 outlook, and the company must navigate a delicate balance between maintaining profitability and meeting demand in a turbulent environment.
