Lufthansa Group is trimming planned growth for 2019 in the face of soaring fuel costs and warned that fares will have to rise.
The German airline combine expects its fuel costs to rise by a further €900 million next year following a rise of €536 million in the past nine months.
The group was also burdened by an increase in costs incurred by flight delays and cancellations, and higher maintenance expenses.
Profits for the nine months of 2018 fell by 7.7% to €2.4 billion year-on-year, mainly attributed to integration costs of parts of collapsed Air Berlin at low cost arm Eurowings.
Airlines operating in Germany are likely to expand capacity by more than ten per cent for winter 2018-19, a development that is still being driven by the demise of Air Berlin.
However, Lufthansa Group carriers will grow by a more modest 8% and will further reduce capacity growth to 3.8% for summer 2019. Fuel costs for next year are projected to be around €850 million higher than in 2017.
CEO Carsten Spohr said: ““We expect to see our full-year costs increase by more than €1 billion in 2018 due to fuel costs and the extra expenses incurred from delays and cancellations alone.
“But despite this, we achieved an adjusted EBIT [earnings] of €2.4 billion for the first three quarters of this year, the second-best nine-month result in our history.
“Had it not been for the losses at Eurowings, we would have posted another record earnings result. This is a clear testament to our sustainable financial strength – a strength that we have demonstrated even under challenging conditions this year.”
Lufthansa Group airlines carried a record 108.5 million passengers in the first three quarters of 2018 with a load factor also at a record high of 82%.
Spohr added: “Future growth in the air transport sector will need to pay far more regard to the capacities of the infrastructure in the air and on the ground.
“At the same time, we aim to secure the profitability of our airlines through capacity discipline. We also expect the substantial rises in fuel costs to lead to higher ticket prices from 2019 at the latest.
“In 2017 we seized a historic opportunity in the consolidation of Europe’s aviation sector.
“And it was the right decision to do so in strategic terms, even if this has given Eurowings a very challenging 2018.
“We view the one-off costs of integrating these operations and of our rapid expansion as a long-term investment that will help sustainably strengthen our market position.”