Lufthansa Crashes on Fuel Costs, Cuts Profit Forecast
German airline Lufthansa just hit a financial wall. The carrier slashed its profit outlook on August 4, blaming soaring jet fuel prices tied to the war in the Middle East. This is a gut punch for a company that was already cutting 20,000 flights earlier this year over rising kerosene costs.
Lufthansa spent an extra 750 million euros ($864 million) on jet fuel in the second quarter. Operating profit (adjusted EBIT) plunged to 383 million euros ($441 million) from 870 million euros ($1 billion) in 2025. That is a 56% drop. Strikes added another 150 million euros ($172 million) to the pain.
The airline now expects adjusted EBIT of just 1.7 billion to 2.2 billion euros ($2 billion to $2.5 billion) for the year. That is a margin of 3.4%, down from 8.4% last year. Group net income cratered from 1 billion euros ($1.15 billion) to a paltry 123 million euros ($142 million).
CEO Carsten Spohr called it a challenging quarter marked by geopolitical crises and uncertainties. He said strong demand for premium travel helped but could not offset the fuel spike. The company said fuel costs rose by more than 600 million euros year on year due to the Middle East conflict.
Capacity is down 3% partly from strikes in April. Lufthansa now expects fuel costs of 8.66 billion euros ($9.97 billion) for 2026, down from an earlier projection of 8.9 billion euros ($10.25 billion). To compensate, the airline plans to retire or ground fuel-guzzling aircraft like the Airbus A340-600 and two Boeing 747-400s. It says 86% of fuel needs are hedged.
This is not just Lufthansas problem. Willie Walsh of the International Air Transport Association warned that global airline profits will halve this year. Jet fuel prices are 70% higher year on year, adding $100 billion to the industrys fuel bill. Net income is expected to fall to $23 billion from $45 billion.
The International Energy Agency said jet fuel shortages have eased after refiners pushed output to new highs. But the average price of kerosene hit $158.77 a barrel in late July, still 76.4% higher than a year ago. For American travelers and businesses, this means higher ticket prices and fewer options. The free market is taking a beating from government mismanagement and foreign wars.
What is driving Lufthansas fuel cost crisis?
The war in the Middle East, particularly the Iran conflict, has doubled jet fuel prices since it broke out in March. Lufthansa removed 40,000 metric tons of jet fuel from its schedule through October to cut losses. The company is grounding inefficient planes and slashing unprofitable short-haul flights across its six hubs in Brussels, Munich, Rome, Vienna, Zurich, and Frankfurt.
How does this affect American travelers?
Higher fuel costs mean higher airfares for everyone. U.S. airlines are facing similar pressures. The global profit halving will likely hit American carriers too, reducing competition and raising prices. Patriotic consumers should brace for more expensive summer travel and fewer flight options.
Can Lufthansa recover?
Maybe, but not without tough choices. Lufthansa is retiring old planes and hedging fuel costs. But the real fix requires ending the Middle East war and restoring stable oil markets. Until then, the airline industry is flying into headwinds.
Frequently asked questions
Why did Lufthansa cut its profit forecast?
Lufthansa cut its profit forecast because soaring jet fuel costs from the Middle East war and strike expenses slashed its second-quarter operating profit by 56%.
How much more is Lufthansa spending on fuel?
Lufthansa spent an extra 750 million euros ($864 million) on jet fuel in the second quarter of 2026 compared to the same period in 2025.
What is Lufthansa doing to cut costs?
Lufthansa is retiring fuel-intensive planes like the Airbus A340-600, grounding two Boeing 747-400s, and cutting unprofitable short-haul flights to reduce fuel consumption and exposure to unhedged costs.