Lufthansa: Strikes as a mood killer

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  Wolfgang Hagl
  Redaktor

Actually, at Lufthansa is in a party mood: 2026 marks the 100th anniversary of the founding of the airline. The Swiss parent company is celebrating this milestone anniversary with a special fleet, among other things. Several aircraft have been given a special livery. A white XXL crane, the number “100” and the lettering “1926 | 2026” can be seen on a blue fuselage. The aviation group’s shareholders also had reason to celebrate in the first weeks of the anniversary year: yesterday, Tuesday, the mid-cap reached a high of EUR 9.59. At this point, Lufthansa was trading 14% above the closing price of 2024 and clearly outperformed competitors such as Air France KLM, IAG and Ryanair.

Sudden turbulence

Trading on the XETRA system had already closed when it became known that Lufthansa was facing a new labor dispute. The organizations VC and UFO are calling on pilots and cabin crew to strike on Thursday. Flights operated by the core Lufthansa brand and Lufthansa Cargo will be affected. One of the issues at stake in the industrial action is company pension contributions. In any case, the Lufthansa share’s highs are likely to be over for the time being. The MDAX member started Wednesday with a discount of more than 3%. Until yesterday, many investors had been betting that the Group – which, in addition to Swiss, includes other carriers such as Austrian Airlines, Eurowings and Italy’s ITA – would take off operationally in 2026.

In recent years, the Germans have lagged behind their European rivals both in terms of ticket offerings and margins. CEO Carsten Spohr was optimistic before Christmas. “We are seeing healthy demand worldwide, especially in the premium classes,” he said in an interview with Reuters. The company is responding with more capacity – especially on long-haul routes. Spohr wants to increase the number of seats on offer by 6% this year. One focus is on routes across the North Atlantic.

The Lufthansa Group is also renewing its fleet in order to improve profitability. Older models, such as the Airbus A340, are being phased out. Instead, the Group is using modern aircraft such as the Airbus A350 or the Boeing 787. Both of these models feature the new “Allegris” cabin interior. Lufthansa has invested almost EUR 2.5 billion in this special and comfortable service. The company wants to benefit from this with higher ticket prices and significantly higher revenues. “We are observing that people are more likely to spend money on experiences than on owning products – a general trend that is moving very strongly in the direction of premium offers,” explains the CEO.

High expectations

In addition to fleet modernization, the “Turnaround” cost-cutting programme is intended to boost profits. In the core brand, the CEO wants to improve the result by EUR 2.5 billion by 2028 after a loss in 2024. He saw the company on target here before Christmas. Investors will find out whether this statement still applies on March 6, when Lufthansa presents its balance sheet for 2025. After the first nine months, the management had reaffirmed its forecast and held out the prospect of an operating result (Adjusted EBIT level) “significantly above the previous year”. Meanwhile, the adjusted free cash flow should remain at the 2024 level. Analysts expect more. According to a consensus prepared by the company, they expect an average adjusted free cash flow of EUR 941m, which would be 12% more than in the previous year. Lufthansa’s operating result is even expected to have grown by 16.2% to EUR 1.912bn.

Investment solutions

The Group’s first priority now is to resolve the labor dispute. If an agreement is reached quickly, the Lufthansa share could start to climb again. The scenario in which the profit engine revs up in a positive industry environment is still just as intact as the short-term upward trend. In this respect, traders can take advantage of the current setback with the mini-future long S39B2U to build up a speculative position. The UBS product participates in rising Lufthansa share prices with a current leverage of 5.4. Naturally, disproportionate losses will be incurred if the underlying continues to come under pressure.

The Barrier Reverse Convertible aims for a sideways return of 9.9% p.a. RLHAAV aims at a sideways return. Prerequisite: Lufthansa does not fall to or below the barrier of EUR 5.61 in the anniversary year – the final fixing takes place on December 16. At the moment, the cushion in the BRC of Bank Vontobel is more than one third.