Deutsche Lufthansa Q1 Earnings Call Highlights

Key Points

• Deutsche Lufthansa reported a stronger Q1 with record first-quarter revenue of EUR 8.7 billion and a year‑over‑year adjusted EBIT improvement of EUR 110 million (adjusted EBIT at minus EUR 612 million), and it reaffirmed 2026 guidance of >10% EBIT growth but said prior headroom has largely gone due to strikes (roughly EUR 200 million hit so far).
• The escalation in the Middle East and sharply higher jet fuel have materially raised costs—Lufthansa now estimates a 2026 fuel bill of ~EUR 8.9 billion (about EUR 1.7 billion above prior guidance); the group has paused regular hedging, is monitoring supply, and has already adjusted its network and redeployed aircraft to manage disruption.
• Management is accelerating operational and fleet actions to cut fuel exposure and complexity—removing 27 CityLine aircraft from schedules, phasing out Canadair, early retiring A340‑600s and grounding some 747‑400s—while Cargo and Technik showed strength (Cargo adj. EBIT up ~35% with a 9.5% margin; Technik external revenue +19%).

Deutsche Lufthansa ETR: LHA reported improved year-over-year first-quarter results and reiterated its 2026 outlook, while executives emphasized that the escalation of the Iran conflict has sharply raised jet fuel costs and introduced new operational risks heading into the peak travel period.

Q1 performance improves as revenue hits record for the quarter

CEO Carsten Spohr said the group “significantly exceeded the prior year's financial results,” with adjusted EBIT improving by EUR 110 million year-over-year despite no capacity growth at the network airlines. Group revenue rose to EUR 8.7 billion, up 8% year-over-year, which Spohr described as the highest first-quarter revenue the company has recorded.

CFO Till Streichert said revenue increased 7.6% year-over-year to EUR 8.7 billion on broadly flat capacity (ASK up 0.5%). Adjusted EBIT improved to minus EUR 612 million, and Streichert attributed the gain to higher passenger revenue, strength in cargo volumes, and “a very strong MRO growth,” alongside structurally higher ancillary revenue. He said three strike days in Q1 weighed on results by about EUR 40 million.

Streichert added that the gap between adjusted EBIT and reported EBIT was “largely explained by book gains,” including a EUR 154 million book gain from the sale of one Boeing 747-8.

Middle East conflict reshapes network and drives cost urgency

Spohr said the Middle East situation and “rising fuel costs” have created “enormous challenges” and prompted quick network adjustments. He said the group was able to “almost fully offset the recent 1% capacity reduction,” equivalent to 20,000 flights for the whole summer, by removing only four destinations from a 300-destination network.

He also described how cancellations of Middle East routes “freed up 13 aircraft,” including three wide-bodies, which are being redeployed for additional frequencies to India and Singapore, adding 13 flights per week to Asia. Lufthansa also shifted commercial focus toward yield, tightening availability of lower fare classes and implementing pricing measures. Spohr said March results supported that strategy, with yields up 5% and seat load factors up 6% year-over-year, while premium cabin yields rose “by almost 2%” in Q1 and 5% in March.

As part of accelerated measures, Spohr outlined steps to reduce fuel exposure and simplify operations, including:

• Removing 27 Lufthansa CityLine operational aircraft from schedules (about a 1% ASK reduction).
• Phasing out Lufthansa CityLine’s Canadair fleet to reduce subfleet complexity.
• Early retirement of less fuel-efficient long-haul aircraft such as the A340-600 by mid-October.
• Grounding part of the 747-400 fleet “at least for the winter.”

Spohr said the recent grounding of loss-making CityLine operations followed the closure of SunExpress Germany and Germanwings and was “the third and final step” in a previously announced plan to consolidate passenger AOCs in Germany.

Segment commentary: network airlines, Eurowings, Cargo, and Technik

Spohr said network airlines improved adjusted EBIT by EUR 135 million, led by Lufthansa Airlines, which delivered a EUR 110 million earnings improvement (or “close to EUR 150 million” excluding strikes). He said SWISS improved by EUR 49 million, and ITA Airways improved by EUR 70 million at the operating result level, while Lufthansa’s equity result tied to ITA declined by EUR 38 million due to currency effects. Unit costs rose 2.5% across network airlines, which Spohr linked partly to minimal ASK growth.

At Eurowings, Spohr said capacity grew 5% year-over-year, traffic revenue rose 14%, and seat load factor improved to 84.4%. Unit revenue increased by “almost 7%,” supported by “disciplined pricing.” However, he cited higher costs, including EUR 60 million of higher IROPS impacts and 29% higher MRO expenses, leaving adjusted EBIT “broadly stable” year-over-year. Spohr added that the overall point-to-point segment result was EUR 14 million below the prior year due in part to SunExpress being EUR 10 million below prior year.

Lufthansa Cargo delivered a year-over-year improvement, with revenue up 5%, expenses up 3%, and unit costs down 7%. Spohr said adjusted EBIT rose 35% year-over-year and the adjusted EBIT margin reached 9.5%. Streichert later noted that post-crisis freight rates were up about 31% worldwide and around 90% on routes to Southeast Asia.

At Lufthansa Technik, Spohr said third-party customers accounted for about 80% of Q1 revenue, with external revenue up 19% year-over-year. He said adjusted EBIT was broadly in line with the prior year, though margins were pressured by ramp-up costs, and management expects “a meaningful recovery in margins” in coming quarters. He also highlighted operational and strategic milestones, including Technik’s 1,000th Pratt & Whitney GTF engine overhaul and progress on expansion projects such as the Tulsa component repair facility and a new engine shop in Calgary.

Fuel: higher bill, hedging protection, and supply monitoring

Streichert said jet fuel prices have risen much more sharply than crude due to widening product spreads and logistics constraints, and that the impact was not fully visible in Q1 because 60% of March fuel consumption settled at previous months’ prices. He said the company’s earlier estimate for March and April fuel cost burden of 20%-25% versus prior guidance landed “rather towards the lower end” of that range.

Based on prices as of the prior week, Streichert said Lufthansa now estimates a 2026 fuel bill of about EUR 8.9 billion, including EUR 8.7 billion for fossil fuel and EUR 0.2 billion for mandatory SAF. That implies an increase of about EUR 1.7 billion versus previous guidance, which he called “the single most relevant cost headwind” for the remainder of the year.

He said passenger airlines are currently about 83% hedged for 2026 and about 36% hedged for 2027, but Lufthansa has temporarily suspended regular hedging activity since early March due to volatility, while selectively adding short-term instruments to protect against jet fuel escalation and spread risk.

On physical fuel availability, Streichert said the group has no current shortages and expects supply to be secured through June, particularly at its hubs, while planning contingencies if conditions worsen. Spohr separately urged European regulators to consider steps such as authorizing Jet A imports from the U.S., temporarily suspending slot rules if cancellations are needed due to fuel shortages, and granting exceptions to European anti-tankering rules if certain airports face shortages.

Outlook maintained, but headroom reduced by fuel and strikes

Streichert reaffirmed the company’s 2026 guidance of adjusted EBIT “significantly above” 2025, which he defined as more than 10% growth. However, he said the company’s previous headroom above that threshold has “largely gone” due to fuel price developments and strike impacts. He quantified the impact of six strike days in Q2 at roughly EUR 150 million, and said strike costs are “rounded roughly EUR 200 million so far” when combined with Q1.

The group maintained targets of adjusted free cash flow of around EUR 0.9 billion and net CapEx around EUR 2.9 billion. For capacity, Streichert said Lufthansa now expects overall ASK growth of 0%-2%, down from “close to 4%,” with intercontinental capacity growth and continental capacity “slightly shrinking.”

Streichert said the key assumption supporting guidance is that incremental network airline revenue can offset incremental fuel costs. He described fuel recapture as around 60% in Q2, with expectations “well above 100%” in Q3 and Q4 if demand remains elevated. He also said that of the EUR 1.7 billion higher annual fuel cost estimate, roughly 10% relates to cargo (which typically passes on fuel costs directly), and he expects nearly 50% of the increase to hit in Q2.

On balance sheet and cash flow, Streichert said adjusted free cash flow reached EUR 1.38 billion in Q1, supported by seasonal working capital effects including about EUR 2.4 billion in advanced ticket sales. Liquidity stood at about EUR 10.3 billion at the end of March. He said Lufthansa used cash to repay a EUR 1 billion Eurobond and a EUR 500 million hybrid, and that leverage improved to 1.6x while investment-grade ratings remained stable.

In Q&A, Spohr said on M&A that there was “not much new to report,” noting a decision window on potentially increasing the ITA stake in June and reiterating interest in TAP while framing it as part of a broader aviation strategy involving Portugal. He also said, regarding labor negotiations, that a resolution would require offering “perspectives” to labor groups and that “costs have to come down,” while reiterating Lufthansa’s ability to maintain 75%-80% of the group flight program during strikes due to its multi-hub structure.

About Deutsche Lufthansa ETR: LHA

Deutsche Lufthansa AG operates as an aviation company worldwide. It operates in three segments: Passenger Airlines; Logistics; and Maintenance, Repair and Overhaul Services (MRO). The Passenger Airlines segment offers products and services to passengers of Lufthansa Airlines, SWISS, Austrian Airlines, Brussels Airlines, and Eurowings. Its Logistics segment offers airfreight container management, urgent shipments, and customs clearance services; and e-commerce solutions. The MRO segment provides maintenance, repair, and overhaul services for civil commercial aircraft serving original equipment manufacturers, aircraft leasing companies, operators of VIP jets, government, armed forces, and airlines.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.