Saturday, July 20, 2019
Home Business Airlines Blame Stock Market After Lufthansa Warning - Indices & Actions

Airlines Blame Stock Market After Lufthansa Warning – Indices & Actions

Lufthansa has lowered its profit forecast for 2019 because of "low-cost airline competition in Europe".

Adjusted earnings before interest and taxes (EBIT) margin should be between 5.5% and 6.5%, compared with 6.5% to 8% previously, which implies a pre-tax Ebit of between two and two, 4 billion euros, against 2.4-3 billion previously targeted.

"Yields in European short-haul markets, particularly in the group's domestic markets, Germany and Austria, are affected by persistent overcapacity caused by carriers willing to accept significant losses to increase their market share. Said Lufthansa. He said the decline in revenues from his low cost subsidiary Eurowings was one of the main reasons for this warning. He also mentioned the overcapacity and high costs of kerosene, which could exceed by 550 million euros the level reached last year.

Last month, Ryanair stated that its annual profit was the lowest of the last four years and could fall further due to a "weary" tariff war.

The title Lufthansa drops more than 10% in the middle of the morning on the Frankfurt Stock Exchange bringing in its wake the entire European airline industry. The Stoxx transport index fell by 0.7%, the largest sectoral decline in Europe. Ryanair shares lost 5.7%, Easyjet lost 4.8%, Air France-KLM dropped 4.9% and IAG sold 2.6%.

Our analysis of the air transport sector:

The sector is going through a difficult time. Competition is becoming increasingly fierce, especially from low-cost airlines. It is also suffering from rising oil prices and rising trade tensions between China and the United States. We are very cautious about airlines. We had bought the Air France KLM stock speculatively shortly after the arrival of Benjamin Smith to less than 8.5 euros with a first goal at 12 euros and a second at 14.5 euros corresponding to the highest of the last 5 years . We keep the value a goal maintained.

The editorial advises you:

. (AirTrans tags) Air France-KLM Airlines blame for stock market blow after Lufthansa warning


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