The Lufthansa Group reported a "weak" first quarter due to high capacity and heavy competition on short- and medium-haul routes in Europe, which pushed fares down.
The group's traffic revenue increased 1 percent year over year to 5.9 billion euros during the quarter. Traffic on the group's network airlines—Lufthansa, Swiss and Austrian Airlines—rose 6 percent as capacity increased by the same rate. Traffic for the group's low-cost carrier subsidiary Eurowings increased 10 percent, keeping pace with its 10 percent increase in capacity during the quarter. Yields, however, declined 3 percent year over year at network airlines and 6.5 percent for Eurowings, which has a higher proportion of short-haul routes.
The group has a sunnier outlook for the rest of the year, as it has reduced its capacity growth "substantially." CFO Ulrik Svensson said: "With a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America."
The group reported a net loss of 342 million euros in the first quarter, compared with a loss of 39 million euros in the first quarter of 2018. Besides the overcapacity issue, Lufthansa saw fuel costs rise 202 million euros year over year.
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