Lufthansa Group has warned that geopolitical tensions and rising kerosene prices are expected to increase its fuel costs by approximately €1.7 billion during 2026, despite the airline group reporting improved financial performance in the first quarter.
The German aviation group said higher revenues, stronger demand and improved cash generation helped offset ongoing operational challenges and rising fuel expenses.
Lufthansa Reports Improved First-Quarter Performance
Lufthansa generated revenue of €8.7 billion during the first quarter of 2026, representing an 8% increase compared with the same period last year and marking the strongest first quarter in the group’s history. The company still recorded an operating loss of €612 million, although this was a notable improvement from the €722 million loss reported in the first quarter of 2025.
Adjusted EBIT margin improved to negative 7.0%, compared with negative 8.9% a year earlier. Net losses also narrowed significantly, improving from negative €885 million to negative €665 million year-on-year.
Cash Flow And Debt Position Strengthen
Lufthansa highlighted strong cash generation as one of the quarter’s key achievements. Adjusted free cash flow increased 65% to €1.4 billion, supported by stronger operating cash flow of €2.1 billion and reduced capital expenditure.
The airline also benefited from aircraft sale proceeds, including the disposal of two Boeing 747-8 aircraft.
The group reduced net debt to €5.3 billion from €6.4 billion at the end of 2025, while liquidity remained strong at €10.3 billion.
Fuel Costs And Middle East Tensions Create Pressure
Despite improved financial performance, Lufthansa warned that ongoing geopolitical instability and fuel price volatility remain major concerns for the aviation industry.
The company said tensions in the Middle East continue creating “enormous challenges” for airlines worldwide.
Lufthansa expects higher kerosene prices to significantly increase operating costs throughout 2026, although the group believes its fuel hedging strategy and multi-hub network help reduce exposure to further disruption.
Passenger Demand Shifts Benefit European Carriers
The airline group said demand trends during March supported stronger unit revenues as some passengers shifted away from disrupted Middle Eastern hubs toward European airlines. This helped offset the impact of reduced direct connectivity to parts of the Middle East. Seat load factor improved to 81.9% during the quarter, while unit revenues increased 3.3% year-on-year.
Overall capacity remained broadly stable, with modest long-haul growth balancing reductions across short- and medium-haul services.
Lufthansa Continues Cost-Cutting Measures
Lufthansa also confirmed additional restructuring measures aimed at improving efficiency and controlling costs.
The group plans to cancel approximately 20,000 short-haul flights as part of broader network adjustments and operational optimization efforts.
The company additionally confirmed the planned closure of its CityLine division as part of its ongoing restructuring programme.
Lufthansa said it will continue adapting its network and operations throughout 2026 as airlines face persistent geopolitical uncertainty, fuel volatility and shifting global travel demand.
