Introduction & Market Context
Deutsche Lufthansa AG (OTC:DLAKY) (ETR:LHA) presented its Q1 2025 financial results on April 29, 2025, highlighting improved performance despite typical first-quarter seasonal challenges and an unfavorable Easter timing shift. The German carrier demonstrated resilience in a quarter traditionally marked by lower travel demand, with notable strength in its cargo and maintenance divisions offsetting passenger airline weakness.
The company emphasized that the global aviation industry has matured, with structural bottlenecks across the ecosystem ensuring "persistent capacity discipline" while demand for travel experiences continues to rise. Lufthansa also noted that its diversified business portfolio enables it to mitigate volatility and deliver consistent value.
Quarterly Performance Highlights
Lufthansa reported Q1 2025 revenues of €8.1 billion, representing a 9.9% increase compared to the same period in 2024. The group’s adjusted EBIT improved to -€722 million, a €127 million improvement from the -€849 million reported in Q1 2024. Management noted that an Easter holiday timing shift negatively impacted earnings by approximately €80 million.
As shown in the following comprehensive financial performance table:
The company’s adjusted EBIT margin improved to -8.9% from -11.5% in the prior year period, demonstrating progress despite seasonal challenges. However, net income declined to -€885 million from -€734 million in Q1 2024, primarily due to interest and other financial effects.
Particularly noteworthy was the 174% increase in adjusted free cash flow, which reached €835 million compared to €305 million in the prior year period. This substantial improvement reflects the company’s enhanced operational efficiency and working capital management.
Detailed Financial Analysis
The North Atlantic routes remained a key strength for Lufthansa in Q1 2025, with passenger numbers increasing 7.1% year-over-year, yields improving 6.7%, and seat load factor rising 0.7 percentage points. This region represented 24% of traffic revenue share, underscoring its importance to Lufthansa’s network.
The following chart illustrates the strong performance on North Atlantic routes:
Lufthansa’s non-airline businesses delivered particularly strong results. Lufthansa Cargo achieved an adjusted EBIT margin of 7.4% in Q1 2025, a significant improvement from -3.2% in Q1 2024, driven by increased yields, higher load factors, and strong demand from China. Similarly, Lufthansa Technik improved its adjusted EBIT margin to 8.0% from 6.3% in the prior year period, benefiting from high demand for MRO (Maintenance, Repair, and Overhaul) services.
The performance of these divisions is illustrated in the following chart:
The company’s balance sheet continued to strengthen, with liquidity increasing to €11.4 billion as of March 31, 2025, compared to €11.0 billion at the end of 2024. The net debt to EBITDA ratio improved to 1.7x from 2.0x during the same period, while net debt and pension liabilities decreased to €7.5 billion from €8.3 billion.
As shown in the following balance sheet strength overview:
Fuel costs, a critical component of airline expenses, decreased slightly by 0.5% despite capacity growth of 4.6% in Available Seat Kilometers (ASK). The company has secured significant hedging positions, with 82% of Q2 2025 and 81% of full-year 2025 fuel requirements hedged, providing substantial protection against potential price volatility.
The following chart details Lufthansa’s fuel hedging position and price sensitivity:
Strategic Initiatives
Lufthansa highlighted several operational improvements in Q1 2025. Network stability reached 97%, a 3 percentage point improvement year-over-year, while customer satisfaction increased to 72%, up 4 percentage points. Service center accessibility improved to 96% (+3 percentage points), and app satisfaction ratings rose to 4.6 from 4.5.
The company’s customer satisfaction metrics are illustrated in the following chart:
The Allegris premium product commercialization began on March 30, 2025, with new routes to Chicago (ORD), San Francisco (SFO), Newark (EWR), San Diego (SAN), and Charlotte (CLT). This product enhancement is part of Lufthansa’s strategy to improve yield and customer experience on long-haul routes.
Additionally, the company has enhanced digital customer touchpoints, including online rebooking capabilities with seat reservations and a new digital help center for traveler support.
Forward-Looking Statements
For the full year 2025, Lufthansa maintains its guidance for an ASK increase of approximately 4% compared to 2024. The company expects adjusted EBIT to "significantly increase" versus 2024, with net CAPEX projected between €2.7-3.3 billion. Adjusted free cash flow is expected to remain stable compared to 2024.
The company’s dividend policy remains unchanged, with a payout ratio of 20-40% of net income. Management noted both revenue risks on North Atlantic routes and favorable fuel price and foreign exchange developments as factors influencing the outlook.
As shown in the following guidance overview:
Lufthansa’s management emphasized that the airline industry has matured, with structural bottlenecks across the aviation ecosystem ensuring persistent capacity discipline while demand for meaningful travel experiences continues to rise. The company also expressed optimism about the new German coalition agreement but stressed the urgent need for quick action and targeted tax relief to ensure European competitiveness in global aviation.
Full presentation:
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