The Japan Times - Lufthansa warns of heightened 'uncertainty' from Mideast war

The war -- which began last weekend with US-Israeli attacks on Iran, triggering retaliatory strikes from the Islamic republic -- has caused the biggest disruption to air travel since the Covid pandemic.

Airspace across the region was forced to close and airports including Dubai and Doha, crucial transit hubs for passengers on long-haul flights, were shuttered.

"The war in the Middle East proves once again how exposed air traffic is and how vulnerable it remains, even though the industry is now more resilient to crises than it used to be," Lufthansa CEO Carsten Spohr said, as the group announced its 2025 results.

"The massive concentration of global traffic flows via the Gulf hubs is increasingly proving to be a geopolitical Achilles' heel."

Outlining its outlook for this year, the group -- which operates Eurowings, Austrian, Swiss and Brussels Airlines and has acquired a stake in Italy's ITA -- cautioned profit predictions were now more difficult.

"Developments in the Middle East and the associated geopolitical consequences for the global economy increase the medium- and long-term forecast uncertainty," it said.

Lufthansa, Europe's biggest airline group by sales, warned in particular of "increased volatility in the oil markets" because of the closure of the Strait of Hormuz, through which about a fifth of the world's crude passes.

Airlines had generally benefitted from stable oil prices in recent years but the surge in energy markets since the outbreak of the war threatens to hit their earnings.

Lufthansa said it expected to grow its earnings this year, and did not put a figure on a potential hit from the Middle East war -- similar to other firms, which have stressed it depends on how long the conflict lasts.

- More long-haul bookings -

Still, Lufthansa also indicated that the disruption to Gulf transport hubs like Dubai and Qatar was pushing business their way, as passengers needing to fly to Asia and Africa look for alternative routes.

The group had seen a "sharp rise in demand for long-haul flights" since the conflict started, it said.

The widespread closures of airspace have brought back memories of the travel shutdowns during the pandemic, which led to Lufthansa being bailed out by the German government.

Announcing its annual results for 2025, the group said net profit fell around three percent to 1.34 billion euros ($1.55 billion), below forecasts of around 1.37 billion by analysts surveyed by financial data firm FactSet.

Revenues rose five percent to 39.6 billion euros. The group's airlines carried 135 million passengers, up three percent from 2024.

The results were more stable than in 2024, when profits plummeted almost a fifth due to the impact of strikes, aircraft delivery delays and rising costs.

Lufthansa has described 2025 as a "transitional year" which has seen it push through a wide-ranging turnaround programme, particularly at its main carrier.

The group is in the process of cutting 4,000 jobs, mainly administrative roles in Germany.

The turnaround efforts were making progress, with the flagship carrier returning to profit, and Spohr stressed that it will remain a "top priority".

K.Yoshida--JT