German airline Lufthansa says profits are set to dip in 2017 despite a pilots' pay deal, due to pressure on ticket revenues and a rising fuel bills. Francis Maguire reports.
It's the kind of climate airlines dread. Lower fares and higher fuel-costs clouding revenues. But that's exactly what makes Lufthansa's forecast so surprising. The German carrier expects pre-tax profit this year to be only slightly lower than 2016 revenues... which came in at 1.75 billion euros. SOUNDBITE (German) CARSTEN SPOHR, CEO, LUFTHANSA, SAYING: "In 2016, we again achieved some of the best results in Lufthansa's history - a record year. Adjusted EBIT at 1.75 billion euros - was roughly at the record level of the previous year. Without the strike effect it would have been higher than the previous year." Analysts had expected a much sharper drop in revenues. Lufthansa's fuel bill alone will go up 350 million euros this year. But the airline said it expects the decline in ticket revenues to ease. Prices have come under pressure in Europe because of competition from low-cost rivals. The battle for market share has created an oversupply. The airline said its savings won't be enough to make up for it. But that may change once it factors in the deal it's made with pilots to end a long-running pay dispute.