Adjusted EBIT €m
On 16 June 2019, the Executive Board of Deutsche Lufthansa AG adjusted its financial outlook for the full year 2019 compared with the forecast published in the Annual Report 2018. An Adjusted EBIT margin of 5.5% to 6.5% is now expected for the full year (previously: 6.5% to 8.0%).
Fuel costs for Network Airlines are anticipated to increase EUR 500m year on year (previously: increase of EUR 600m), fuel costs at Eurowings are expected to be EUR 50m up on the year (previously: increase of EUR 100m).
Earnings outlook for Network Airlines was adjusted, primarily due to weaker-than-expected income on European short-haul routes. Performance on long-haul routes is in line with original expectations. However, earnings in European short-haul traffic are diminished by overcapacities, aggressive competition and increasingly price sensitive demand, especially in the German and Austrian home markets.
For 2019 Network Airlines are therefore expecting a low single-digit decline in unit revenues on a constant-currency basis (previously: stable to low single-digit decline). Although the increase in MRO expenses is higher than originally expected, predominantly as a result of significantly more engine maintenance operations, unit costs will decrease year on year by 0% to 1% (previously: decline of 0.5% to 1.5%).
The Group is now expecting an Adjusted EBIT margin for Network Airlines of between 7% and 9% in 2019 (previously: 7.5% to 9.5%).
Ongoing optimisation of the route network will lead to a capacity reduction of around 1% at Eurowings (previously: capacity unchanged year on year). Eurowings is hit harder than Network Airlines by the challenging market environment in Europe because its route portfolio is different; unit revenues are therefore expected to fall by a mid single-digit percentage (previously: stable to low single-digit increase). Progress on reducing costs at Eurowings is slower than expected; decline in unit costs over the full year now forecast at between 6% and 8% (previously: decline of 7% to 9%).
The Group is now expecting an Adjusted EBIT margin for Eurowings of between – 4% and – 6% in 2019 (previously: around 0%).
Revenue in the Logistics segment is now expected to be the same as last year, with an Adjusted EBIT margin of 3% to 5% (previously: 7% to 9%). Forecast is unchanged for the MRO and Catering segments. Earnings in the Additional Businesses and Group Functions segment is now expected to fall by EUR 50m (previously: decline of EUR 100m).