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Lufthansa expects profit fall this year

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Revelation comes despite deal with pilots
Lufthansa reported results for last year that were in line with expectations and has achieved a deal with striking pilots. But it forecasts a slight fall in profits this year due to pressure on revenues and the rising cost of fuel.
Lufthansa Group generated revenues of €31.7 billion in 2016, a decline of 1.2% on the prior-year result. Adjusted EBIT for the year amounted to €1.75 billion, a decline of 3.6%. This means that, as expected, earnings before strike costs of €100 million came in at the previous year’s level.
Chief financial officer Ulrik Svensson said the year started well, with revenues improving even in Asia. But revenues are under pressure in Europe.
Aviation analysts are concerned that Europe’s airlines are in a damaging battle for passengers, adding more capacity than there is demand for. Lufthansa will increase capacity by 12% this year, much of which is due to the takeover of Brussels Airlines and an aircraft deal with Air Berlin.
The group’s fuel costs are expected to rise by €350 million this year to €5.2 billion. However, Lufthansa struck a pay and pensions deal with pilot union Vereinigung Cockpit on Wednesday, putting a stop to a long series of damaging strikes.
Reuters / TTG Nordic

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