FRANKFURT: Lufthansa is confident it will achieve its profit target this year thanks to strong business in July and August and a turnaround in its short-haul European business, the airline's chief executive told Reuters on Friday.
"We are positive that we will comfortably achieve our adjusted EBIT target of more than 1.5 billion euros this year," Carsten Spohr said in an interview at the group's main base in Frankfurt. He said the Germanwings unit, which has been taking over much of Lufthansa's short-haul routes in Europe, will make a double-digit million euro profit this year, its first profit in years.
"(It's) beyond our expectations considering where we started from two years ago," he said. Lufthansa shares extended gains after the comments, rising by as much as 6.6 percent and easily outperforming a weaker European travel and leisure index. Lufthansa is changing Germanwings, bringing it under the banner of its new budget unit, Eurowings, where it hopes to lower costs further in order to better compete with the likes of Ryanair and easyJet, which are expanding on its home market.
Ryanair, easyJet and eastern-European focused Wizz Air have all reported strong demand this summer driven by Europeans jetting off on holidays.
"There's more and more non-stop travel on the European front," Spohr said, adding there was space for Eurowings in Lufthansa's core markets Germany, Austria and Switzerland, where low-cost carriers have not gained as much market share.
However, not everyone at the group is in favour of the Eurowings plans, with pilots' union Vereinigung Cockpit threatening strikes this week.
Spohr has taken a hard line on the pilots, saying strikes are the price the company has to pay if it wants to restructure.
He also said on Friday the company had received over 1,000 applications for pilot jobs at Eurowings. Rival carrier Air France-KLM is also facing resistance from pilots as it tries to lower costs.
Union sources said on Friday the French arm, Air France, was threatening to shrink its long-haul network unless pilots accept changes to their working conditions.
"The future sustainability of the Lufthansa Group is the most important target after safety and therefore we have to do what we have to do," Spohr said.
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