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Lufthansa cuts EBIT after falling revenue from Eurowings budget business

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Christian Fernsby |
Lufthansa   Yields in the European short-haul market are affected by overcapacities

Lufthansa forecast earnings before interest and tax (EBIT) of between €2 billion and €2.4 billion, compared with the previously targeted €2.4 billion to €3 billion.

“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.

Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning. Revenue here was forecast to decline significantly in the second quarter.

It also cited high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.

Lufthansa’s outlook is more positive for its long-haul business, especially on transatlantic and Asian routes, it said.

Lufthansa said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.

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