German airline Lufthansa forecast delay in profit growth in 2016, despite lower fuel prices, warning for competition with lower rates and declining average ticket prices, reported Finance Appraise Journal. Lufthansa benefits from lower oil prices and strong demand for travel in 2015, which allowed the company to resume payments of dividends to shareholders. However, these factors increase the competitiveness on the market and the rivals also benefit, getting higher market stake. Lufthansa predicts a significant drop in profitability this year, as well as on the key measure of revenue per mile per passenger, including due to the addition of longer routes to those of Eurowings.
The company’s Chief Financial Officer, Simone Menne, told reporters that she could not account improvement in profitability in Europe soon. Lufthansa said it expected a small profit growth in 2016 after reporting adjusted earnings before interest and taxes (EBIT) amounting to 1.82 billion EUR in 2015. Simone Menne told that group is not ready to give more ambitious forecast to early this year.
Along with savings of 1 billion EUR from fuel costs in 2016, Lufthansa would cut spending after the unit costs without fuel and currency effects increased by 2.4% in 2015. The attacks on popular tourist destinations – from Paris to Tunisia and Turkey also reduced the confidence of passengers at the beginning of the year.
“People still travel, but book their tickets later. We recognize caution to the earlier reservations, but no less passengers. This is a change in the trend in bookings”, said Simone Menne.