Germany’s Lufthansa gave an upbeat forecast for air travel recently, saying it expected demand to remain strong, with high average yields, as holidaymakers splash out on tickets.Consumer demand for travel in Europe is holding up despite record-high euro zone inflation, with travellers willing to pay higher fares, according to recent statements by airlines including Ryanair and easyJet.
Lufthansa said that the continued high premium demand from leisure travellers was especially remarkable, with load factors in Business and First Class exceeding pre-pandemic levels. Its yields, a metric of profitability, jumped by 23 per cent in the third quarter versus 2019, reaching a new record high.
“With this sort of commentary even at the end of October, by when the airline should have significant visibility into November (one of the softest months in a typical year), we could be looking at an industry confounding fears of a macro-driven slowdown even as Europeans turn the heating on,” Bernstein analyst Alex Irving said.
Lufthansa plans to offer around 80 per cent of its pre-pandemic capacity at its airlines in the fourth quarter, which should help it achieve a quarterly operating profit, it said as it published full quarterly financial results.
The group last week raised its forecast for full-year adjusted operating profit to over USD 1 billion (USD 980 million), boosted by strong demand for air travel that continued its post-Covid recovery.
The company had previously expected adjusted operating profit (EBIT) of more than 500 million euros.
In the third quarter, it posted adjusted EBIT of EUR 1.13 billion (USD 1.14 billion), up from 251 million a year earlier, it said.