European airline giant Lufthansa Group expects demand for air travel to "remain high" in 2025 and plans to increase capacity by 4 percent while implementing a "turnaround" strategy for its core Lufthansa brand.
The group, which also owns Austrian Airlines, Brussels Airlines, Swiss and Eurowings, achieved a 6 percent year-on-year increase in annual revenues to €37.6 billion, largely driven by increases in load factor. However, its operating profit of €1.6 billion represented a 39 percent decline compared to 2023.
In an earnings report on Thursday, the group blamed higher costs, aircraft delivery delays and increased competition, particularity in the Asia-Pacific region, as reasons behind the profit decline. Strikes and industrial action in Germany in the year's first half also impacted its airlines to the tune of €450 million.
Its flag carrier, Lufthansa Airlines, was the hardest hit, reporting a €94 million loss in 2024, and contributed significantly to the group's overall profit decline.
"Delayed deliveries of new aircraft forced Lufthansa Airlines to keep aircraft in service for longer, which, together with higher location and personnel costs and increased expenses for compensation for flight irregularities, weighed disproportionately on earnings," the company said in its earnings report.
All other airlines in the group reported positive earnings results for 2024, but only Brussels Airlines posted a year-on-year increase in profits, up €6 million to €59 million, which marked the carrier's highest profit to date.
Swiss posted €801 million in profits, Austrian Airlines saw €76 million and Eurowings recorded €203 million in profits.
The company reported "strong" demand for air travel with passenger numbers increasing 7 percent year-on-year to 131 million, while passenger load factor hit a "record high" of 83.1 percent.
Lufthansa Group chairman and CEO Carsten Spohr said 2024 "was a year of two halves" and that 2025 will be a year of transformation.
"In the first six months, we still had to cope with a significant decline in operating profit – due, among other things, to strikes, delayed aircraft deliveries and operational challenges at our hubs. The trend was reversed in the course of the year with two consecutive quarters in which we generated revenue of over €10 billion each for the first time, and in the fourth quarter we exceeded the previous year's profit," he said in a statement.
The company also said its turnaround program at Lufthansa Airlines is making "noticeable progress" and is expected to achieve a "gross effect" of around €1.5 billion on earnings by 2026.
For the year ahead, the group expects demand to remain high and will expand capacity by approximately 4 percent. It will also continue investments to renew its fleet and expects to take delivery of a new generation aircraft "every two weeks" in 2025.
The expansion of its multi-hub model is also expected to drive further growth in 2025, following its recent acquisition of ITA Airways.
The complete integration of ITA Airways is expected to be completed in 2026, with the relocation of ITA Airways in Munich and Frankfurt likely to be finalized in time for the 2025 summer season "in order to facilitate transfer connections".
Lufthansa Group CFO Till Streichert said: "This year, we expect moderate capacity growth of around 4 percent. This will help to support our revenue growth, secure valuable market shares, stabilise our earnings and further improve our operations.
"We therefore regard 2025 as a transition year in which we will lay the foundations for future increases in profitability. Nevertheless, progress will be clearly visible in every respect. This will also be reflected in our adjusted EBIT, which we expect to be significantly higher than in the previous year."
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