Lufthansa Downgrades 2024 Outlook Amidst Labor Dispute

Lufthansa, the German airline, has given a subdued outlook for 2024 due to costly labor disputes that are offsetting the travel boom. The airline warned that its operating losses in the first quarter will widen. Despite the travel boom and unprecedented demand after the pandemic, higher labor and maintenance costs have limited earnings growth.


The airline stated that its operating results this year would be on par with 2023, but did not reaffirm its target for operating margins to hit 8% for the year. They were 7.6% in 2023. Adjusted EBIT margins will fall to 6.9% this year from 7.6% in 2023, according to a company-provided analyst poll. Lufthansa has agreed to new, higher-pay deals to end strikes, which analysts and investors say threaten its 2024 operating margin target. On Thursday, Lufthansa ground staff walked off the job, while on Wednesday cabin crew voted to strike as they sought a 15% wage increase, a potential harbinger of further profit erosion.

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Despite the adjustment in the operating margin target, the company said its results were strong enough to propose issuing a dividend of 0.30 euros a share, to be voted on at the annual general meeting on May 7. The group has not issued a dividend since 2019.

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The results come almost two weeks after the airline announced the surprise departure of respected chief financial officer Remco Steenbergen, which knocked its share price and rattled investor confidence. Operating profits for 2023 were up 76% from 1.5 billion euros ($1.63 billion) in 2022. Revenues of 35.4 billion euros ($38.58 billion) were up almost 15% but were lower than the 36.3 billion euros expected in a company-issued poll.

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