Lufthansa lowers its 2024 operating margin objective to 7.6%

Lufthansa reported a 2.7 billion euro operating profit for 2023 but lowered its projected 2024 margin to 7.6% due to labor issues and a decline in logistics profitability, causing a larger predicted operating loss.

As anticipated, on Thursday, Lufthansa recorded an operating profit of 2.7 billion euros ($2.94 billion) for 2023. However, due to ongoing labor issues, the airline lowered its projected operating margin in 2024 to 7.6% from 8%.

The German airline stated that the impact of strikes and a decline in logistics profitability will offset robust post-COVID travel demand, resulting in a bigger predicted operating loss in the first quarter than in previous years.

The company stated in a statement that the group is still dedicated to producing a sustainable adjusted EBIT margin of at least 8%. Following the epidemic, Europe's airlines had record demand, which allowed them to boost fares; nonetheless, earnings growth was constrained by increased labor and maintenance costs.

In particular, Lufthansa has consented to new, higher-paying agreements to end strikes, which investors and experts believe puts its operating margin objective 2024 in jeopardy. On Wednesday, the cabin crew decided to go on strike to protest their 15% pay raise, which could signify a further decline in company profits. The news of the airline's abrupt resignation of well-respected CFO Remco Steenbergen, which devastated its stock price and unnerved investors, was announced about two weeks ago.