Deutsche Lufthansa AG (DLAKF) (Q2 2026) Earnings Call Highlights: Record Revenue Amid Fuel Cost ...

Negative Points

• Adjusted EBIT declined by almost EUR500 million in Q2 to EUR883 million, impacted by a EUR750 million increase in fuel costs and strike-related disruptions.

• Repeated strikes by cabin and cockpit unions cost at least EUR150 million, and the company faces ongoing labor negotiations that could impact operations.

• Aircraft delivery delays continue, with only 6 of 11 planned aircraft received in Q2 and full-year deliveries now expected at 41 versus 45, affecting fleet renewal and capacity growth.

• The company reduced capacity by 3.3% due to Middle East cancellations and route discontinuations, including the accelerated wind-down of Lufthansa City Line, which incurred EUR180 million in full-year costs.

• Eurowings and the point-to-point segment reported a break-even result, with a EUR37 million loss including SunExpress, due to higher fuel costs and upfront investments for the Boeing 737 introduction.

• The full-year guidance was adjusted to a range of EUR1.7-2.2 billion, reflecting increased uncertainty from fuel price volatility and shorter booking cycles, with capacity now expected to be broadly flat.

• Lufthansa Technik faces short-term challenges from reduced airline capacity, leading to lower demand for MRO services and supply chain shortages for engines and spare parts.

Q & A Highlights

Q: Can you elaborate on the unit revenue outlook and whether you are deliberately not talking about recapture rates above 100% for Q3 and Q4, given the fuel cost guidance has come down since Q1? Also, where are you on the 22% increase in crew productivity by 2028, and is there any update on strike potential? A: CFO Till Streichert confirmed that Q2 achieved a recapture rate of about 60%, in line with previous guidance. He noted that mathematically, to make the full-year guidance work, the fourth quarter will require a recapture rate that clearly exceeds 100%. CEO Carsten Spohr stated that the productivity increase at Lufthansa Airlines is on track, driven by fleet cleanup, the shift of aircraft to more productive AOCs like Lufthansa City Airlines and Discover, and the grounding of the least productive AOC, Lufthansa City Line. He added that constructive talks with unions are progressing, and the union leadership understands that productivity increases are necessary for future growth and hiring in Lufthansa Classic.

Q: Regarding the 777X, as a global launch customer, do you have enough comfort to accept them given other airlines' concerns? How does this shape your confidence in retiring old technology in 2027? Also, you mentioned potential opportunities in Berlin and Geneva if easyJet were to be taken privatecould you elaborate? A: CEO Carsten Spohr explained that entry into service is still planned for summer 2027, with Boeing promising Q1 delivery. The company has two parallel plans: Plan A assumes on-time delivery, while Plan B involves reactivating A340-300s kept for this purpose if there are further delays. Regarding the first built aircraft, Lufthansa is in talks with Boeing about which aircraft will be accepted for commercial service and which can be modernized with Boeing's financial contribution. On easyJet, Spohr mentioned Berlin and Geneva as obvious points in their network where they compete, but noted it's too early to speculate, and the regulatory environment is very difficult.

Q: What are you seeing in terms of demand trends related to AI equipment in cargo, and how is the fourth quarter peak season developing? Has your view on air cargo for this year changed? Also, what is the next step and timeline for TAP, and do you have any comment on TAP unions' concerns about your labor relations? A: CEO Carsten Spohr noted that cargo trends are positive, with supply chain disruptions and increased demand for transporting server racks becoming an industry-shaping element. This is a very profitable business, and Lufthansa expects cargo's adjusted EBIT to be significantly above last year, with Q4 being the most decisive quarter. On TAP, Spohr dismissed concerns from one union as being closely aligned with Lufthansa's German unions, while other TAP unions have been constructive. The timeline and next steps are up to the Portuguese government.

Q: In terms of the cadence of EBIT margin improvement over the next couple of years, will 2027 also be a transition year depending on aircraft delivery rates? And does the slightly lower CapEx this year step up next year? A: CFO Till Streichert confirmed that aircraft deliveries are a major lever for margin improvement, and due to delays, 2027 will likely still have aspects of a transition year. The slight reduction in CapEx this year is largely associated with fewer aircraft deliveries than expected. He reminded that sale and leasebacks are part of the strategy, currently at mid-teens levels, and will be used as a flexible instrument to manage net CapEx and free cash flow in line with the Capital Markets Day plan.

Q: Can you provide any color on expectations for 2027 aircraft deliveries? Also, do you see anything coming from the German coalition's labor market reforms that could benefit Lufthansa's crew productivity efforts? A: CEO Carsten Spohr stated that the 2027 delivery schedule is already impacted by 2026 delays, with A350-900s and A350-1000s moved into 2027, and the 777 situation as previously discussed. This will impact CapEx, though the overall plan remains the same. On labor reforms, Spohr noted that Lufthansa's collective labor agreements are more restrictive than what the government is willing to touch, and changes require union approval. He expressed encouragement that Berlin is showing signs of understanding that structural disadvantages need addressing, noting Lufthansa is one of the few real economy companies in Germany still growing.

Q: On Lufthansa Technik, you mentioned temporary softer demand for MRO capacity and lower than planned engine overhaul business growth. Can you elaborate on this? Also, regarding the mid to high single-digit revenue growth needed in the back half, does filling load factor gaps require yield stimulation, which could be challenging with capacity accelerating? A: CEO Carsten Spohr explained that airlines worldwide are lowering flight hours, directly affecting power-by-the-hour contracts, and companies are delaying heavy checks due to cost savings. Limited spare parts availability also forces turning down requests. However, long-term MRO trends remain positive due to older aircraft flying longer and new aircraft having higher maintenance costs per shop visit. CFO Till Streichert addressed the yield question, stating that seat load factor gaps are closing in the weeks before departure without heavier intervention, consistent with shorter booking cycles. He emphasized that yield management is done individually per flight, and the mid to high single-digit RASK increase is needed to meet the recalibrated guidance.

Q: What percentage of fuel is hedged for 2027, and what would be the debt fuel price after hedge? Also, transatlantic capacity was down 6% in Q2 with unit revenues only up 1.5%what was the percentage impact on transatlantic RASK from the strikes? A: CFO Till Streichert stated that the hedge ratio for 2027 is now at a bit more than 50%, following a restart of hedging activity in Q2 with a layered approach aiming for about 85% six months before departure. On transatlantic, the strike effect at Lufthansa Airlines alone represented about 4 percentage points of ASK decline, and there was also a spillover effect on customer sentiment throughout May.

Q: On unit cost inflation in H2 2026, should we expect the same extent as Q1? Also, can you provide an update on the unions and strike potential? A: CFO Till Streichert noted that in H2, capacity is expected to grow, with growth in intercontinental driving stage length positively. Cost control remains strong, with underlying CASK

For the complete transcript of the earnings call, please refer to the full earnings call transcript .