Deutsche Lufthansa Q4 Earnings Call Highlights

Deutsche Lufthansa (ETR:LHA) executives used the company’s full-year 2025 results call to outline financial and operational progress in what management repeatedly described as a “transition year,” while also addressing heightened uncertainty stemming from a fast-moving crisis in the Gulf that began impacting flight operations and fuel markets in recent days.

Management addresses Gulf disruption and early booking trends

CEO Carsten Spohr opened the call with an update on the Gulf situation, saying the group prioritized safety and stopped flying “a day early” to the region to avoid having aircraft stranded. Lufthansa initially closed 10 destinations, including Larnaca, which Spohr said would reopen on Saturday, while the other destinations were expected to remain closed for at least a few more days.

CFO Till Streichert said Middle East traffic would have represented about 3% of capacity in the first quarter (versus roughly 2% in 2025). He estimated an earnings impact of about EUR 5 million per week from cancellations, based on lost business and cost of care. Both executives stressed that demand shifts were already creating offsets. Streichert said that since last weekend, additional bookings on Asia and Africa routes “by far overcompensated” the cancellations on Middle East routes, with revenue intake for March departures about 60% higher than last year over a recent multi-day period. He added that global net revenue intake for the full year during those days was more than 20% higher year-over-year, suggesting a broader uplift beyond March.

Management also highlighted cargo impacts. Streichert said about 18% of global air freight capacity in the Middle East was currently not available, shifting cargo streams and contributing to higher yields in recent days (including +5% worldwide and +35% in the Middle East and Asia). Spohr said Lufthansa was adding extra sections to markets such as Bangkok, Singapore, Shanghai, Cape Town and India using spare aircraft and crews freed up by cancellations.

2025 results: record revenue, higher adjusted EBIT, stronger cash flow

Streichert said group revenue increased 5.4% year-over-year to a record EUR 39.6 billion, supported by disciplined passenger airline capacity growth of 3.8%, strong third-party revenue growth at Lufthansa Technik, and continued air cargo demand. Adjusted EBIT rose by EUR 350 million to EUR 1.96 billion, lifting the adjusted EBIT margin to 4.9%.

He noted that net income did not rise alongside EBIT due to a one-off tax valuation effect. Adjusted free cash flow improved to about EUR 1.2 billion, driven by stronger adjusted EBIT, tax reimbursements, and slightly lower net CapEx.

Cost pressures remained a theme. Streichert cited a 10% increase in fees and charges and a 40% increase in emission certificates in 2025. Fuel, however, provided a tailwind: the 2025 fuel bill was EUR 514 million lower than the prior year, and total fuel costs were EUR 7.3 billion in line with guidance.

Airlines: operational improvements, turnaround progress, and premiumization

Spohr said operational improvements reduced flight irregularity costs by 43%, equivalent to EUR 362 million, which he described as a “significant input” into improved results. Streichert said the passenger airlines surpassed the prior year despite a challenging environment, with adjusted EBIT up EUR 41 million aided by favorable fuel prices, lower irregularity impacts, and a positive earnings contribution from ITA.

Streichert said Lufthansa Airlines’ adjusted EBIT improved by roughly EUR 250 million, reflecting progress in its turnaround program. He said turnaround measures delivered a gross earnings impact of more than EUR 500 million in 2025, and the company expects the measure volume to increase to EUR 1.5 billion by end-2026 and EUR 2.5 billion by 2028. Lufthansa Airlines is targeting a high-single-digit adjusted EBIT margin in 2028 to 2030.

Operationally, group seat load factor was 83.2%, slightly higher than 2024, with momentum toward year-end. Streichert said yields came under pressure on short haul and parts of long haul, but pointed to strength in the North Atlantic: unit revenue increased 2.1% in the fourth quarter on a currency-adjusted basis.

Allegris, the group’s premium product rollout, was repeatedly cited as a yield driver. Spohr said Lufthansa achieved 12% higher yields for Allegris than the former business class and noted ancillary revenues increased 15% in 2025. He also said Lufthansa finally certified Allegris seats on the Boeing 787 and received 23 new aircraft deliveries during the year, including seven 787s. Streichert added the Allegris share of Lufthansa Airlines’ widebody fleet is expected to reach as much as 50% by year-end, with a 12% RASK uplift currently observed from Allegris.

On unit costs, Streichert said ex-fuel CASK rose 3.6% in the first half, slowed to 0.5% in Q3, and was “almost flat” in Q4. For 2026, he said Lufthansa Airlines aims to limit the increase in ex-fuel CASK to a maximum of half the annual rate of inflation.

Logistics and Technik: cargo earnings growth and Technik headwinds

Lufthansa Cargo delivered adjusted EBIT of EUR 324 million, up 29% year-over-year, according to Streichert. Cargo revenue increased 4%, supported by a 5% capacity increase driven by one additional freighter and higher belly capacity. He said strong demand came from Asian e-commerce, semiconductors, aviation components, and pharmaceuticals. Ex-fuel unit costs fell by around 6%, helped by lower charter expenses, IT cost reductions, and improved crew productivity.

Lufthansa Technik posted 12% revenue growth and exceeded EUR 8 billion in revenue for the first time, with third-party business up 23%. Adjusted EBIT was EUR 603 million, broadly in line with the prior year, as results were weighed by foreign exchange effects and U.S. tariffs on aluminum and steel, which Streichert said impacted earnings by roughly EUR 30 million. He said mitigation measures helped drive an earnings recovery in Q4 and that negative tariff effects are expected to diminish further in 2026. He also pointed to capacity expansion in Portugal, Tulsa, Calgary, and Malta, particularly in the engine segment, and said Technik earnings are expected to increase significantly in 2026.

2026 outlook: higher adjusted EBIT expected, but uncertainty rises

Streichert said Lufthansa plans to increase capacity by around 4% in 2026, focusing growth on intercontinental routes in the mid- to high-single-digit range while keeping continental capacity broadly unchanged. On that basis, he said the group expects adjusted EBIT in 2026 to be “significantly above” 2025, though he cautioned that the range of uncertainty has increased due to events in the Middle East.

Fuel is a central variable. As of the prior Friday referenced on the call, Lufthansa’s 2026 fossil fuel bill estimate was around EUR 7.2 billion (including EUR 0.2 billion for mandatory SAF), which Streichert said implied a tailwind of about EUR 100 million versus 2025, largely due to a weaker U.S. dollar. He also said the passenger airlines had hedged about 82% of fuel needs for the remainder of 2026, while acknowledging that jet crack spreads had moved sharply higher since then and were not fully hedged.

Investment spending is set to rise. Net CapEx is expected to be about EUR 2.9 billion, reflecting planned delivery of up to 45 new aircraft, which management described as the largest single-year fleet expansion in company history, including 27 widebodies. Adjusted free cash flow is expected to be around EUR 0.9 billion, slightly below 2025 due to the higher investment volume.

Shareholder returns were also addressed. Spohr said the company plans to increase the dividend by 10% to EUR 0.33 per share, which management said implies a dividend yield of 4% and a payout ratio of 30%.

During Q&A, management also discussed the ongoing integration of ITA, noting that ITA reached break-even on adjusted EBIT in 2025 and that Lufthansa’s 41% stake contributed EUR 90 million to results. Streichert said Lufthansa would keep its options open regarding the timing of taking a majority stake and would communicate closer to the June decision point.

About Deutsche Lufthansa (ETR:LHA)

Deutsche Lufthansa AG operates as an aviation company worldwide. It operates in three segments: Passenger Airlines; Logistics; and Maintenance, Repair and Overhaul Services (MRO). The Passenger Airlines segment offers products and services to passengers of Lufthansa Airlines, SWISS, Austrian Airlines, Brussels Airlines, and Eurowings. Its Logistics segment offers airfreight container management, urgent shipments, and customs clearance services; and e-commerce solutions. The MRO segment provides maintenance, repair, and overhaul services for civil commercial aircraft serving original equipment manufacturers, aircraft leasing companies, operators of VIP jets, government, armed forces, and airlines.