Lufthansa Warns of Double-Digit Fare Hikes as Fuel Shock Hits Europe’s Largest Airline

The era of post-pandemic fare normalization appears to be ending.

Europe’s largest airline group by revenue warned Tuesday that travelers should expect substantially higher ticket prices as escalating fuel costs driven by the Middle East conflict ripple through the aviation industry, adding billions of euros to carriers’ expenses and threatening to squeeze profits despite robust demand.

Lufthansa said its fuel bill is now expected to reach €9.3 billion in 2026, roughly €2 billion higher than a year earlier, reflecting the impact of an energy market disrupted by months of geopolitical turmoil. The company’s revised outlook follows similar warnings from other airlines, including Ryanair, as carriers increasingly acknowledge that higher operating costs will ultimately be borne by passengers.

“The increase in kerosene costs will have to be passed on to customers,” Chief Financial Officer Till Streichert told reporters after the group reported quarterly results that exceeded expectations. “Ticket prices will see a double-digit increase next year.”

The warning underscores how a conflict initially viewed through a geopolitical lens is increasingly being felt in household budgets and corporate travel spending. Since February, the near-total closure of the Strait of Hormuz, one of the world’s most important energy corridors, has driven up global oil and gas costs, pushing aviation fuel higher and removing one of the industry’s key advantages as demand recovered.

While Lufthansa has sought to shield itself from market volatility through extensive hedging, management made clear that protection has limits. More than 80% of the group’s fuel needs for 2026 have already been hedged, while over 60% of projected fuel costs for 2027 are likewise covered. Even so, the company expects fuel expenses to rise further next year.

Streichert said the outlook could still improve if geopolitical tensions ease, but current forecasts assume a significantly more expensive operating environment than management anticipated only a few months ago.

The higher fuel burden has already prompted Lufthansa to trim its earnings expectations. The group now forecasts operating profit for 2026 of between €1.7 billion and €2.0 billion, narrowing its previous guidance, which envisioned a possible result as high as €2.2 billion.

Yet the revised outlook was delivered alongside one of the strongest quarterly performances in the company’s recent history.

Net profit rose 30% in the July-through-September period to €1.26 billion, supported by resilient demand for premium travel on routes connecting Europe with Asia and North America. Revenue climbed 9% year over year to €12.2 billion.

One of the quarter’s standout performers was Lufthansa Cargo, whose operating profit tripled amid growing demand for shipments related to the rapid expansion of artificial intelligence infrastructure. Chief Executive Carsten Spohr said deliveries of equipment destined for data centers played a key role in the division’s performance as investment in AI capacity accelerates globally.

Not every business unit shared in the gains. Lufthansa’s core passenger airline saw operating profit decline, weighed down in part by strikes involving both cabin crew and pilots.

Nevertheless, Spohr described the latest quarter as the strongest in the company’s history from a revenue perspective.

“Thanks to higher revenue, consistently strong demand and strict cost discipline, we were able to largely offset the approximately half-billion-euro increase in fuel costs,” he said.

The results highlight a growing divide within the industry. Passenger demand remains strong, premium cabins continue to perform well and airlines are generating healthy revenue. But a sustained energy shock is beginning to reshape pricing strategies across the sector, leaving carriers increasingly reliant on fare increases to protect profitability.

For travelers, the message from Lufthansa is straightforward: demand may be holding up, but the cost of flying is heading higher.

(Photo: © AndKronos)