Lufthansa shrinks losses but braces for €1.7bn fuel shock

Lufthansa Group narrowed its first-quarter loss and held annual guidance on Wednesday, even as Europe's largest airline warned that the Middle East conflict would add €1.7 billion to its 2026 fuel bill.

The German carrier reported record first-quarter revenue of €8.7 billion, up 8% year on year, while its adjusted operating loss narrowed by €110 million to €612 million. Net debt fell to €5.3 billion from €6.4 billion at the end of 2025, and liquidity stood at €10.3 billion.

Chief executive Carsten Spohr struck a defensive note. The group is around 80% hedged against fuel price volatility for the year and intends to offset the kerosene shock through higher ticket yields, network optimisation and further cost cuts. Geopolitical disruption is also boosting demand, with passengers rerouting through Frankfurt and Munich rather than the Gulf and lifting yields on long-haul bookings.

Even so, the headroom is tight. Chief financial officer Till Streichert said the earnings impact is heavily backloaded into the rest of the year, particularly the second quarter, with the full-year fuel bill now expected to reach around $8.9 billion. Goldman Sachs cut the stock to sell on Wednesday, citing an estimated €1 billion hedging loss, while Morgan Stanley followed with its own downgrade.

Spohr is pressing Brussels for relief, calling for European airports to permit Jet A kerosene alongside the standard Jet A1, an easing of anti-tankering rules, and looser slot-use requirements. He has also accelerated the grounding of 27 CityLine CRJ regional jets and consolidated the group's German air operator certificates.

The market verdict is more cautious than the company's. Lufthansa still expects full-year operating profit to come in significantly above 2025's €1.96 billion. Investors, for now, are less convinced.