Lufthansa Group delivered a strong summer performance, with record quarterly revenue and a rise in operating profit, but the escalating conflict in the Middle East is casting a long shadow over its finances. The German aviation giant now faces an additional €2 billion in fuel costs this year, prompting it to trim its full-year profit guidance.
For the July-to-September period, the group's adjusted operating profit climbed 6% year-on-year to €1.4 billion, while revenue grew 9% to €12.24 billion – the strongest quarter in the company's history. CEO Carsten Spohr credited "rising revenues amid consistently high demand and strict cost discipline" for offsetting the surge in fuel expenses, which increased by approximately half a billion euros during the quarter.
The pressure is not unique to Lufthansa. Across the industry, carriers are grappling with higher kerosene prices, and Ryanair's Michael O'Leary warned in October that European airfares could rise significantly in 2027 as fuel costs, taxes, and capacity constraints push prices upward.
Mixed performance across the group
While the group's network airlines – SWISS, Austrian Airlines, and Brussels Airlines – all improved their quarterly results, Lufthansa's core airline lagged. Its adjusted operating profit fell by a third to €300 million, reflecting the challenges of higher costs and competitive pressure. The overall group performance was buoyed by Lufthansa Cargo, which more than tripled its adjusted operating profit to €162 million, and Lufthansa Technik, which saw a 54% increase to €200 million.
The strong quarter contrasts with the first nine months of the year, where revenue rose 8% but net profit dropped 35%. To mitigate the impact of rising fuel prices, Lufthansa has already taken steps to reduce costs, including grounding aircraft and cutting flights. Its CityLine subsidiary withdrew 27 operational aircraft from the schedule in April, and the company announced cuts affecting 20,000 short-haul flights through October, saving an estimated 40,000 tonnes of jet fuel.
The group has also tightened spending on recruitment, internal events, and external consultants, alongside its existing plan to eliminate 4,000 administrative jobs by 2030.
Fuel costs and hedging strategy
Chief Financial Officer Till Streichert said the group expects healthy demand in the fourth quarter, but the full-year fuel bill is now projected to reach €9.3 billion, up from €7.27 billion in 2025 – an increase of roughly €2 billion. To shield itself from further price volatility, Lufthansa has hedged 86% of its passenger airlines' fuel requirements for 2026, using financial contracts to lock in prices in advance. More than 60% of 2027 requirements are also hedged.
The group now expects full-year adjusted operating profit of €1.7 billion to €2 billion, lowering the upper end of its previous forecast of €1.7 billion to €2.2 billion. Streichert noted that the final result will depend on demand, fuel costs, and the performance of Lufthansa Cargo in the fourth quarter.
The situation remains fluid, with oil prices sensitive to geopolitical developments. Recent talks over the Strait of Hormuz have led to some dips in oil prices, but the threat of further escalation persists. For European carriers, the cost of fuel remains a critical variable, and Lufthansa's experience underscores the broader challenges facing the continent's aviation sector.
