Lufthansa strikes upbeat tone, but monitoring for US demand weakness

By Joanna Plucinska and Rachel More

BERLIN (Reuters) -German airline Lufthansa stuck to its 2025 financial guidance on Tuesday and said it was optimistic about the key summer season, striking a more upbeat tone than some rivals while cautioning it was monitoring the impact of trade tensions.

European airlines are entering the first-quarter earnings season with investors fretting about demand as U.S. President Donald Trump's tariff policies hit U.S. air travel and cloud global growth prospects.

"Despite all the geopolitical uncertainties, we ... remain on course for growth, are optimistic about the summer, and are sticking to our positive outlook for 2025," Lufthansa CEO Carsten Spohr said in a statement.

Earlier this month, U.S. carrier Delta pulled its 2025 financial forecast, pointing to Trump's tariff threats as a drag on demand. Virgin Atlantic also said it had seen a slowdown in travel to Britain from the United States.

Air France-KLM, which reports first-quarter results on Wednesday, said earlier this month it would consider cutting economy fares to boost transatlantic travel if needed.

The transatlantic route is key for global airlines, underpinning the results of players such as IAG-owned British Airways.

Lufthansa said demand in the U.S. sales region was continuing to rise. In March, the airline group carried around 25% more passengers from the U.S. to Europe than a year earlier.

Still, the company said it had set up "a task force to closely monitor current developments and, if necessary, respond quickly and flexibly to any weakening in demand, for example by adjusting capacity".

Lufthansa is counting on the lucrative transatlantic route as it strives to revive its core airline, bogged down by wage talks and high pay, and find new sources of revenue as it struggles to compete with Chinese carriers in Asia.

UNCERTAINTY

Spohr told journalists there was some weakness in bookings for the third quarter, particularly to the U.S., but that Lufthansa was still hopeful the numbers could rebound.

Lufthansa shares were down 3.5% at 1045 GMT following the media call, having been little changed after the results were published.

"Macroeconomic uncertainties, particularly the trade tensions between the U.S., the EU and other regions, are making it difficult to forecast the coming quarters accurately," the German flag carrier said in a statement.

Spohr added that capacity growth for the fourth quarter to the U.S. would be revised down from 6% to 3%.

For the first three months of 2025, Lufthansa reported an adjusted loss before interest and tax of 722 million euros ($822 million), roughly in line with a company-compiled forecast.

That's a 15% improvement from a loss of 849 million euros for the same quarter last year. Revenues were up 10% on last year at 8.1 billion euros.

Weakening oil prices have "the potential to offset any potential modest demand softening" in the market, Neil Glynn, managing director at Alvarez and Marsal, told Reuters.

However, RBC analyst Ruairi Cullinane pointed to an increase in operating losses at Lufthansa's passenger airlines as "disappointing".

($1 = 0.8782 euros)

(Reporting by Joanna Plucinska and Rachel More. Editing by Varun H K and Mark Potter)