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Fuel-cost fall to lift profit at Lufthansa

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Airline expects 2015 fuel bill to fall by 13%

Obvious winners as the price of oil continues its descent are airlines. Lufthansa expects its fuel bill for 2015 to fall by 13% after hedging costs, setting it on course for a profit rise this year.

It estimates a fuel bill of €5.8 billion in 2015, down from €6.7 billion in 2014, according to a presentation posted on its website this week. This is based on a Brent crude price of USD$68 a barrel. Brent is currently below $50 a barrel.

In the past, airlines have used tumbling oil prices to lay on more flights, but this is unlikely to happen in 2015 as it could create uncertain pricing and affect capacity. Airline groups such as Lufthansa, IAG and Air France-KLM are also seeing no let-up in the intensity of competition from low-cost carriers.

Lufthansa expects operating profit to be around €1 billion for 2014 and significantly above that for 2015. Its new low-cost long-haul business, based in Cologne and flying under the brand Eurowings, will be launched on October 15.

However, a long-running dispute with pilots union Vereinigung Cockpit has not been resolved and further strikes remain a possibility.

Reuters

[photo courtesy Lufthansa]

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