Lufthansa stock rallies amid high air travel demand forecast

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Lufthansa stock rallies amid high air travel demand forecast

Lufthansa's shares experienced a significant surge this week, with a 7% climb on Friday and an overall 13% rise for the week. This robust performance follows the German airline's announcement of an 8% increase in Q3 revenue to €10.3 billion ($11 billion), primarily fueled by heightened passenger numbers and fare hikes.

The carrier managed to achieve the projected net income of €1.6 billion by ferrying 38 million passengers, marking a substantial increase from the 33 million passengers transported in Q3 2022. Despite facing a sluggish German economy and geopolitical hurdles, Lufthansa is optimistic about the future, forecasting air travel demand to rise to 91% of pre-COVID levels in Q4.

The airline's CEO, Carsten Spohr, maintains a positive outlook despite these challenges. He attributes the revenue growth not only to increased passenger numbers but also to higher airfares, which have helped offset a 14% cost hike resulting from a pay raise for its 19,000 cabin crew members.

While Lufthansa's core business has seen promising growth, some sectors have not fared as well. Lufthansa Technik and the cargo business reported a decline in earnings due to weak market demand.

Even though Lufthansa's shares are down over 2% year-to-date, the recent surge indicates a strong recovery following a record-breaking summer and continued high air travel demand into Q4. The company's robust booking outlook further supports this positive trajectory.

InvestingPro Insights

Lufthansa's's revenue for the last twelve months as of Q2 2023 stands at a hefty $39511.13M, reflecting a substantial growth of 50.4%.

InvestingPro Tips suggest that Lufthansa's strong earnings should enable continued dividend payments, a factor that might appeal to investors seeking regular income. Additionally, the company's consistent increase in earnings per share signals a healthy financial performance. However, it's noteworthy that the company's revenue growth has been slowing down recently, which could be a point of concern for potential investors.

With over 100 additional tips available, InvestingPro offers valuable insights that can guide investors in making informed decisions. For more detailed analysis and tips, consider exploring the InvestingPro platform.

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