Deutsche Lufthansa (ETR:LHA) used its annual press conference reviewing the past year to highlight progress in what management called a “year of transformation,” led by operational improvements at its core airline, continued demand strength on key long-haul markets, and the earnings contributions of its cargo and maintenance divisions. Chief Executive Officer Carsten Spohr and Chief Financial Officer Till Streichert also addressed geopolitical disruption in the Middle East, regulatory headwinds in Europe, fleet renewal timelines, and shareholder returns.
Transformation focus and operational performance
Spohr described the turnaround program at Lufthansa Airlines as the most important element of the group’s transformation, saying the core brand regained operational stability and improved punctuality and reliability. He said costs tied to flight irregularities in 2025 declined by 43%, which he linked to a roughly 5% improvement effect on revenue and helped support the group’s performance.
Financial results and dividend proposal
Streichert said the group generated nearly EUR 40 billion in revenue, driven by capacity growth and a higher share of third-party business, while industry-wide cost increases continued to weigh on results, including a cited 10% increase in certain cost items. He said adjusted EBIT improved year over year and the adjusted EBIT margin also improved, while net investments were “outpaced” (as described in the remarks) by performance progress.
Spohr said the group delivered an increase in its operative result of EUR 315 million, described as a 19% increase, while the consolidated result of EUR 1.3 billion was at the level of the prior year. He added that results would have been “markedly” affected by items including revaluation effects and improvements in operating performance, and he pointed to fleet modernization and product upgrades as positive contributors.
For shareholders, Spohr said the company will propose a dividend of EUR 0.33 per share at the May 12 annual general meeting, representing a 10% increase versus the prior year and a 30% distribution ratio.
Network demand trends and capacity plans
Management pointed to the North Atlantic as a key market with robust demand, particularly in premium cabins. Streichert said the group expanded capacity primarily on the North Atlantic and continental markets and recorded higher average yields on the North Atlantic, citing strong demand.
On regional strategy, Spohr said India has overtaken China to become Lufthansa’s second most important market after North America. He referenced a new partnership agreement with a long-time Star Alliance partner in India and linked this to broader growth ambitions in what he called one of the fastest-growing aviation markets globally.
Asia service planning was also framed by airspace constraints. Spohr said Lufthansa’s China network remains profitable but expansion is limited by the closure of Russian airspace, while Chinese carriers can still fly through Russia. He said growth potential is therefore asymmetric, though Lufthansa can add flying on certain routes such as Shanghai where demand supports it.
Looking ahead, Streichert said the group plans to expand capacity by around 4% in 2026, with a “clear” emphasis on growth areas, alongside fleet modernization. He also said Lufthansa expects a significantly improved result for 2026 compared with the previous year, despite uncertainties tied to the Middle East.
Four strategic pillars and profit drivers
Spohr said Lufthansa’s structure will be reflected more clearly in financial statements via four strategic pillars:
- Hub airlines: Five hub carriers accounting for about 70% of sales, underscoring the importance of the Lufthansa Airlines turnaround.
- Point-to-point: Non-hub European point-to-point operations.
- Logistics: Lufthansa Cargo, which Spohr described as a reliable brand benefiting from volatility and short-term booking for urgent transports.
- Lufthansa Technik: The maintenance, repair, and overhaul business, described as the world’s largest independent provider, supporting about 20% of commercial aircraft globally.
Streichert provided segment detail, saying Lufthansa Cargo’s adjusted EBIT rose nearly 30% year over year to EUR 324 million, driven by higher volumes, improved utilization, and lower unit costs, with strong demand in areas including automotive and pharmaceuticals. For Lufthansa Technik, he said adjusted EBIT reached EUR 303 million and referenced a roughly 20% increase in third-party business growth. He also noted the result included a tariff-related impact of around EUR 30 million, adding that the company took mitigating measures and is monitoring legal developments to potentially reclaim tariffs if possible.
Fleet renewal, geopolitics, and regulatory issues
Spohr emphasized that Lufthansa is in the midst of what he called the most comprehensive fleet renewal in its history, and said the group expects to receive 45 new aircraft in the current year. He also said Lufthansa Airlines plans to phase out five aircraft types over the next two years, including variants of the A340 and the 747-400, as part of simplification and modernization.
On Boeing’s 777X program, Spohr said Lufthansa now expects its first 777-9 deliveries in the first quarter of 2027 and said he remains confident after discussions with Boeing. He added that the retirement timing of older aircraft will depend on how stable manufacturer deliveries are in coming years, and noted Lufthansa is refurbishing some older aircraft, including A380s, with the Allegris business class product.
Geopolitics featured prominently. Spohr described the aviation sector’s exposure to conflicts and said the current escalation in the Middle East has shifted demand patterns, with increased demand on Asia and Africa routes due to disruption in the Persian Gulf. Management also highlighted Lufthansa’s fuel hedging position, calling it a competitive advantage in an environment of rising oil prices.
On regulation and costs, Spohr criticized what he called unilateral disadvantages for European carriers stemming from regulatory costs and policy decisions “coming from Berlin and Brussels.” He argued that Germany faces especially high location costs and said Lufthansa operates a significant portion of hub aircraft outside Germany. He also welcomed steps to reverse increases in Germany’s aviation tax as a “first step,” while maintaining that airport costs in Germany remain among the highest in Europe and continue to be a challenge for local traffic markets.
During Q&A, Spohr also addressed collective bargaining, saying negotiations with unions were ongoing and that he did not expect strike waves like those seen in earlier years, while acknowledging that strikes raise costs. He also discussed discussions with airport operator Fraport, indicating decisions about future infrastructure investments—such as Munich’s satellite terminal—would be needed.
Finally, management fielded questions on potential M&A interest in Portugal’s TAP, with Spohr saying the process was only beginning and any transaction would have to create value for stakeholders. He also said Lisbon could offer a unique strategic position for the group compared with competitors, but emphasized it was too early to comment on approvals or pricing.
About Deutsche Lufthansa (ETR:LHA)
Deutsche Lufthansa AG operates as an aviation company worldwide. It operates in three segments: Passenger Airlines; Logistics; and Maintenance, Repair and Overhaul Services (MRO). The Passenger Airlines segment offers products and services to passengers of Lufthansa Airlines, SWISS, Austrian Airlines, Brussels Airlines, and Eurowings. Its Logistics segment offers airfreight container management, urgent shipments, and customs clearance services; and e-commerce solutions. The MRO segment provides maintenance, repair, and overhaul services for civil commercial aircraft serving original equipment manufacturers, aircraft leasing companies, operators of VIP jets, government, armed forces, and airlines.
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