Airline giants Lufthansa and Air France-KLM buck trade war concerns, reporting Q2 revenue growth
In the face of economic uncertainty and US tariffs, European airlines Air France-KLM and Lufthansa have reported higher second-quarter profits. This growth is primarily attributed to strong demand, improved unit revenues, capacity increases, lower fuel costs after hedging, and fleet renewal with next-generation aircraft.
Air France-KLM's second-quarter website operating profit rose to €736m from €513m a year earlier, in line with analyst expectations. The group's revenues increased by 6.2% to €8.4 billion, driven across all business segments. Operating profit rose by €223 million year-on-year to €736 million, with a margin of 8.7%.
Fuel prices after hedging declined by 11%, reducing operating expenses. Fleet renewal advanced with 30% of planes being next-generation aircraft, improving efficiency. Cost increases, linked to higher air traffic control, airport charges, maintenance, and inflation, were partly offset by productivity gains. The cash position remained strong at €9.4 billion with leverage at 1.5x EBITDA.
Meanwhile, Lufthansa reported a 27% year-on-year increase in second-quarter website operating profit to €871m. The company benefitted from resilient demand, premiumization strategies, and cost management to sustain profitability amid external challenges like tariffs and global economic volatility.
Despite warnings on US demand and tariffs, Lufthansa posted a net profit turnaround of €127 million in H1 2025 compared to a net loss the previous year. Overall revenue growth of 3% to €10.3 billion was boosted by strong global travel demand and favorable currency effects.
Air France has benefited from strong demand to Paris and capitalised on its luxury French appeal, while KLM has struggled with ongoing challenges at Schiphol airport near Amsterdam. Spohr, Lufthansa's chief executive, stated that uncertainty remains about the future of demand, but lower oil costs and efficiency efforts are helping to keep the outlook stable.
In contrast, Air France-KLM's chief executive Ben Smith expressed interest in bolstering the group's operations in Copenhagen, possibly reallocating resources from Air France and KLM, now that it has taken a majority stake in Scandinavian carrier SAS.
US airlines have also seen an improvement in bookings since late June after a sharp drop in March and April. Demand has stabilized for US airlines, but it is below estimates at the start of the year. Wealthy Americans are flocking to Europe this summer, with Delta and United Airlines performing better due to resilient demand for premium and long-haul international travel.
Air France-KLM has seen big share price rises this year as it has managed to weather ongoing geopolitical turbulence. Lufthansa's chief executive Carsten Spohr confirmed a positive outlook for the full year. Spending by price-sensitive travelers remains depressed amid lingering uncertainty about the US economy and rising living costs.
[1] https://www.airfranceklm.com/media/news/2022/07/air-france-klm-publishes-its-second-quarter-2022-results [2] https://www.airfranceklm.com/media/news/2022/07/air-france-klm-publishes-its-second-quarter-2022-results [3] https://www.lufthansagroup.com/en/media/news-and-media-releases/article/lufthansa-group-reports-h1-2022-results [4] https://www.lufthansagroup.com/en/media/news-and-media-releases/article/lufthansa-group-reports-h1-2022-results [5] https://www.reuters.com/business/aerospace-defence/lufthansa-posts-higher-second-quarter-profit-2022-08-04/
- Air France-KLM's surge in second-quarter profits, aided by robust demand and improved unit revenues, allows them to reinvest in their lifestyle offerings, such as expanding operations at Copenhagen airport to match their majority stake in Scandinavian carrier SAS.
- Lufthansa's resilient demand and cost management strategies, despite external challenges like tariffs and global economic volatility, have encouraged more wealthier Americans to travel internationally this summer, contributing to a revitalized travel lifestyle for both Lufthansa and its passengers.
