Investing.com - Lufthansa (ETR:LHAG) has said it is upbeat about its future prospects, backing its full-year guidance even as the German flag carrier grapples with an uncertain outlook for travel.
Recent global trade disputes, linked in part to U.S. President Donald Trump’s punishing -- and now mostly postponed -- tariffs on a host of countries, have exacerbated worries around the outlook for the airline industry. Fears that the levies could contribute to a global economic slowdown have threatened consumer sentiment and fueled predictions that travellers may pull back on spending to protect their pocket books.
Several U.S. airlines, including Delta (NYSE:DAL), have moved to withdraw their annual forecasts, citing the murky economic picture. Lufthansa’s regional peer Air France-KLM, meanwhile, has said it would consider slashing some fares to support transatlantic travel.
"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," Lufthansa said in a statement.
However, CEO Carsten Spohr said demand for air travel has continued to grow, noting that activity in the current quarter has remained "robust". Spohr added that Lufthansa is "optimistic" about the all-important summer travel season.
Against this backdrop, Lufthansa reiterated its full-year forecast for adjusted earnings before interest and taxes "significantly above" the previous year’s level of 1.645 billion euros.
The group said it has also established a task force to "closely monitor" ongoing developments and "if necessary, respond quickly and flexibly to any weakening in demand". Such actions could include an adjustment in capacity, it noted.
CFO Till Streichert said that other factors, such as lower fuel prices or more favorable exchange rates, could help offset the impact of a possible downturn in demand.
In its first quarter, Lufthansa posted an adjusted loss before interest and taxes of 722 million euros, a 15% improvement from the same period last year and approximately in line with forecasts compiled by the company.
Lufthansa also reported a net loss of 879 million euros, widening by 20% year-on-year, which analysts at Jefferies attributed to a lack of tax benefits. Analysts had called for a net loss of 649 million euros.
"A mixed bag o nthe face of it, but we view the first quarter positively," the Jefferies analysts said in a note to clients.
Shares in Lufthansa edged slightly lower in early European trading on Tuesday.