Lufthansa’s earnings miss expectations

 
Kasmira Jefford
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LUFTHANSA, Europe’s biggest airline, has cut back its plans to expand capacity next year after posting weaker than expected third quarter results.

Operating profit fell to €575m (£357m) from €783m a year earlier, after being hurt by the European debt crisis, turbulence in the financial markets and waning growth in the global economy, the German aviation group said in a statement yesterday.

“Fears of a recession and concerns about the effects of the debt crises in Europe and the US have already had a clear effect on the course of business since the third quarter,” chief executive Christoph Franz told reporters at a press briefing.

Lufthansa issued a profit warning last month, saying it no longer expected to improve on last year’s operating profit after its passenger airlines unit had a weaker than expected August.

The group has now scaled back its plans to increase the number of seats on planes next year to three per cent from the original plans for nine per cent. It had already cut planned capacity growth for the winter season twice to address sliding demand.

Lufthansa said it was exploring “various disposals and strategic options” for its loss-making UK subsidiary British Midland International (BMI), and hoped to conclude a sale by the end of the year.

Shares in the group closed up 3.44 per cent at €10.39 yesterday. The stock lost 35.1 per cent in the third quarter, ending September at €9.76.