Lufthansa May Say 4th-Quarter Profit Fell on Higher Oil Prices

Deutsche Lufthansa AG, Europe’s second-biggest airline, may say fourth-quarter earnings slumped because of rising fuel costs and slowing travel demand.

..Lufthansa’s fuel bill jumped about 40 percent each quarter last year, more than at Air France-KLM Group, as oil prices rose, according to Penny Butcher, a London-based analyst at Morgan Stanley who rates the stock “overweight/cautious.” Traffic increases at Cologne, Germany-based Lufthansa are now lagging behind competitors including Air France, Europe’s biggest airline.

Lufthansa has fought rising oil prices with ticket surcharges since 2004 and hedging policies put in place in 1990. The carrier says it has saved more than 1.5 billion euros by buying contracts that cap the price for fuel over the past 15 years.

The German carrier may set aside money for penalties that could come out of a European Union and U.S. investigation into price-fixing among cargo airlines, Butcher at Morgan Stanley said.

Bloomberg