Lufthansa shares tumble as Middle East conflict forces profit warning
Lufthansa has slashed its 2026 earnings forecast and seen its shares drop sharply after higher fuel costs and strikes eroded second-quarter profits.
Lufthansa shares fell more than 11 per cent in Frankfurt on Tuesday after Germany's flagship carrier cut its 2026 profit outlook, blaming soaring jet fuel prices linked to the Middle East conflict and a wave of industrial action that has grounded thousands of flights.
The airline now expects adjusted earnings before interest and tax of between €1.7bn and €2.2bn for 2026, a sharp downgrade from its previous guidance of "significantly" higher earnings than the €1.96bn recorded in 2025. Second-quarter core profit plunged 56 per cent to €383m, even as revenue rose 10 per cent to €11.1bn.
Fuel costs and strikes squeeze margins
Higher fuel prices added roughly €750m to the group's costs in the quarter, according to finance chief Till Streichert. Lufthansa managed to pass on about 60 per cent of that increase through higher fares, but Streichert acknowledged the remainder could not be recovered. "We could make up for a good amount of these additional costs," he told analysts. "But not entirely."
Visibility there is somewhat lower than it would otherwise be because we are seeing customers book less in advance.
Strike action by cabin crew and pilots over pay and pensions chopped a further €200m from earnings and forced the cancellation of thousands of flights in the first half of the year. The disputes remain unresolved, raising the risk of further disruption through the peak summer season.
Sector-wide pressure
Lufthansa is not alone. IAG, the parent of British Airways, reported a more than one-third drop in net profit on Friday, while Air France-KLM, easyJet, Ryanair and American Airlines have all flagged collapsing margins in recent weeks. The common thread is the surge in jet fuel prices as the war in the Middle East disrupts petrochemical supplies through the Strait of Hormuz, a dynamic explored in our recent analysis of oil market tensions.
Outlook hinges on booking behaviour
Streichert said the group still plans to raise ticket prices in the second half to offset fuel costs, but warned that customers are booking later than usual, reducing visibility on demand. That shift makes it harder to gauge how much of the cost increase the market will bear. With strikes ongoing and fuel markets volatile, the path to the revised 2026 target remains uncertain.
