June 4, 2018 / 5:43 AM / 5 months ago

Lufthansa eyes another record summer, but sticks to profit target

SYDNEY (Reuters) - Lufthansa’s (LHAG.DE) chief executive is expecting another record summer in terms of bookings but is still sticking to a forecast for profit to fall this year given rising oil prices and the cost of expanding its Eurowings business.

German airline Lufthansa CEO Carsten Spohr speaks during the company's annual news conference in Frankfurt, Germany March 15, 2018. REUTERS/Ralph Orlowski

“Basically we are looking for a record summer, even outperforming the record summer of 2017,” Carsten Spohr told Reuters on the sidelines of an aviation industry meeting in Sydney.

“That applies to the load factors and we are quite positive on the yield situation for this summer,” he said.

Global airlines on Monday slashed their forecast for industry profits in 2018 due to a spike in fuel costs.

Lufthansa is growing its Eurowings budget unit via acquisitions, and Spohr said Lufthansa could grab more opportunities when they arose.

While Alitalia would make a good addition to its collection of premium brands, alongside Lufthansa, Swiss and Austrian units, it needed restructuring first.

Asked whether Lufthansa was interested in Norwegian Air Shuttle (NWC.OL), Spohr said: “Everybody talks to everybody right now. It’s a small continent.”

The rising oil price has led some executives meeting in Sydney to suggest carriers could cut capacity at some point.

Lufthansa, trying to fill the gap left by the collapse of local rival Air Berlin, has no plans to reduce capacity in light of higher oil prices. It has however cut capacity following delays to aircraft deliveries due to engine issues.

“Our forward bookings are so strong I am happy with all the growth we can realise,” he said.

Spohr said Lufthansa’s A320neo fleet was only at half the productivity it should be and was still working with Airbus (AIR.PA) and engine maker Pratt & Whitney (UTX.N) to fix the issues. Lufthansa had also ordered A320ceo planes to make up for the delays.

Separately, other airlines including British Airways (ICAG.L), Virgin Atlantic and Air New Zealand (AIR.NZ) are grappling with Rolls-Royce (RR.L) engine problems on 787 Dreamliners that has grounded some planes.

Spohr said the various aircraft engine issues affecting the industry could even have a positive effect by reducing capacity growth.

“As an industry we all know it’s healthy to have less growth,” he said.

Reporting by Victoria Bryan; Editing by Maria Sheahan and Stephen Coates

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