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Lufthansa (ETR: LHAG) offered an update Friday as it adjusted its profit forecast for 2024, causing notable ripples throughout the stock market. Initially, the stock nosedived to a mark unseen since October 2022, but showed a modicum of recovery, ending at €5.63—a dip of roughly 2.74%.
The airline is now eyeing an adjusted earnings before interest and taxes (EBIT) for 2024 in the range of €1.4 billion to €1.8 billion, a sharp decline from its previous goal of around €2.2 billion. Lufthansa highlights that the revised forecast hinges substantially on the performance of its main airline operations and the critical fourth quarter for Lufthansa Cargo.
Not just EBIT, but the outlook for Adjusted Free Cash Flow also took a hit. Where the airline had once anticipated a minimum of €1 billion, the new estimate is now "significantly" lower, indicating further financial strains.
Preliminary figures for Q2 2023 paint a bleak picture of Lufthansa's current struggles. The Lufthansa Group achieved an adjusted EBIT of €686 million, a stark contrast to the €1.1 billion posted in the same quarter last year. This decline is attributed largely to a widespread dip in average revenues across all traffic segments, especially pronounced in the Asian market.
The second half of 2024 will be critical for the airline. Hitting the midpoint of the revised forecast range demands an adjusted EBIT of approximately €1.76 billion, slightly below the €1.87 billion recorded in the second half of 2023.
Investors will need to keep a close eye on forthcoming quarters as the airline navigates through these turbulent times.
