Lufthansa profit slumps 56% on Iran war fuel costs and strikes, full-year outlook cut

Profit collapse

Lufthansa reported a 56% drop in adjusted operating profit for the second quarter of 2026, falling to €383 million from €870 million a year earlier. Revenue rose 8% to €11.1 billion, but higher costs overwhelmed the top-line gain. Net profit slumped 88% to €123 million, a fall exaggerated by the comparison: a positive tax effect in the same quarter last year lifted the base against which it is measured. The operating margin shrank to 3.4%, far from the group's medium-term target of 8–10%.

Fuel and strikes

The Iran war, which began at the end of February, pushed kerosene costs up by €750 million in the quarter. Lufthansa had hedged more than 80% of its fuel needs, but the unhedged portion still inflicted heavy damage. Six strike days by cockpit staff in April, called by the Vereinigung Cockpit union on separate dates including the 13th, 14th, 16th and 17th, added another €150 million in expenses. CFO Till Streichert said about 60% of the higher fuel bill was passed on through ticket price increases, and fares will keep rising in the second half.

People want to fly, and they can afford it even at higher prices.

Competitive disadvantage

While the fuel shock hit all airlines, Lufthansa fared worse than its main European rivals. Air France-KLM and IAG, the parent of British Airways, both remained solidly profitable. Bernstein analyst Alex Irving noted that Lufthansa is the only major Western carrier with negative operating cash flow; adjusted free cash flow turned to minus €365 million and net debt rose more than 20% year-on-year. Competitors benefited from stronger home markets (London and Paris generate more point-to-point traffic than Frankfurt or Munich) and from earlier, more aggressive restructuring. British Airways modernised under former CEO Willie Walsh, while Air France-KLM's Ben Smith defused labour conflicts and streamlined the airline.

Temporary tailwinds fade

Lufthansa did gain from the Iran conflict in one respect: the temporary closure of Gulf hubs forced Emirates and Qatar Airways to suspend operations, boosting Lufthansa's ticket revenues on Asia routes. But CEO Carsten Spohr said those carriers now have "everything back in the air" and are competing with aggressive pricing, especially for price-sensitive leisure travellers. Corporate customers, however, still prefer direct connections and many firms ban stopovers in the Gulf.

Our business model is robust, adaptable and, as is currently evident in times of global crises, increasingly resilient.

Outlook and strategy

Full-year adjusted operating profit is now forecast at €1.7 billion to €2.2 billion, down from an earlier goal of clearly exceeding the prior year's €1.96 billion. The outcome depends on fuel price trends and booking behaviour. Spohr said fuel supply has normalised, with refineries raising capacity and new supply chains from Nigeria established; full-year fuel costs are now expected at €8.7 billion, €200 million less than the May estimate. Lufthansa plans to focus on long-haul growth and is considering a further 1% cut in European capacity. Overall capacity will stagnate this year, reversing an earlier plan for up to 4% growth. The cargo and maintenance units continued to perform well, with Lufthansa Cargo benefiting from higher freight rates and the integration of ITA Airways.

Market reaction

Lufthansa shares fell more than 10% intraday on 4 August after the results and guidance cut. The stock had already lost over 3% in pre-market trading. The group's first-half net loss reached €542 million, compared with a €127 million profit in the same period of 2025, and the full-year range implies a possible 15% decline in operating profit if the low end materialises.