Lufthansa has cut its profit targets for the next two years citing the increased growth from state-owned Gulf airlines.
The airline said carriers such as Emirates and Qatar Airways are “advancing even further” into the European market, also by investing in European airlines – such as Etihad's deal with Alitalia
The warning comes as Lufthansa cut its profit forecast for 2014 to €1 billion from a previous forecast of €1.3-1.5 billion and lowered its 2015 earnings target to €2 billion from €2.65 billion.
Lufthansa, which is Europe's biggest airline in terms of sales, also blamed increased competition from European low-cost carriers for its cut in profit forecast.
A three-day strike by a pilots union in April also wiped €60 million of its annual profit, and the airline said “only recently” had booking activity returned to normal.
“The revenue risks mentioned when we presented the quarterly figures in early May have unfortunately materialised," said Simone Menne, chief finance officer, Lufthansa.
“The Group had already warned against increasing risks to the earnings forecast in the first quarterly reports. Above all it is the Group’s American and European business that has suffered from increasing excess capacity, which leads to falling prices on these routes.
“We will therefore noticeably reduce our capacities during the winter timetable period,” Menne added.
The profit warning comes just over a month after the appointment of new CEO Carsten Spohr.
Lufthansa.com