- Revenue Growth Full-year revenue rose 5.4% to €39.6 billion, driven by 3.8% capacity growth in Passenger Airlines and strong cargo demand.
- Adjusted EBIT Margin Improved to 4.9% (€1.96 billion), up €350 million YoY, reflecting cost discipline and ancillary revenue gains (+15%).
- Flight Irregularity Cost Reduction Lufthansa Airlines cut irregularity costs by 43% (€362 million) through operational improvements.
- Dividend Increase Raised by 10% to €0.33/share (4% yield, 30% payout ratio), signaling confidence in cash flow resilience (€1.2 billion adjusted free cash flow).
- Allegris Product Success New business-class offering generated 12% higher yields than standard business class, contributing to ancillary revenue growth.
Operational Highlights
The company's turnaround efforts, particularly at Lufthansa Airlines, showed significant improvements, with a reduction in flight irregularity costs by 43%, equivalent to EUR 362 million. The introduction of the Allegris product led to a 12% higher yield compared to the former business class. Ancillary revenues rose by 15% in 2025, driven by the rollout of Allegris.
Valuation and Dividend
With a P/E Ratio of 5.92 and an EV/EBITDA of 4.9, the company's valuation appears reasonable. The dividend yield stands at 3.69%, with a payout ratio of 30%. The company's decision to increase the dividend by 10% to EUR 0.33 per share reflects its confidence in its financial performance.
Outlook and Guidance
Lufthansa expects adjusted EBIT to be significantly above the 2025 level in 2026, with a 4% capacity increase and cost inflation partly offset by transformation programs and fleet modernization. The company targets a high single-digit adjusted EBIT margin by 2028-2030 for Lufthansa Airlines, driven by fleet renewal, productivity improvements, and other turnaround initiatives.
Segment Performance
Lufthansa Cargo delivered a strong performance with 4% revenue growth, driven by a 5% capacity increase, and an adjusted EBIT of EUR 324 million, up 29% year-over-year. Lufthansa Technik achieved 12% revenue growth, with total revenue exceeding EUR 8 billion, and adjusted EBIT of EUR 603 million.
Fuel Hedging and Costs
The company has hedged around 82% of its fuel needs for the remainder of 2026, providing protection against potential fuel price increases. Lufthansa estimates its fossil fuel bill for 2026 to be around EUR 7.2 billion. The company's hedging strategy is expected to provide a relative advantage, with 50% of gas oil hedged, which is strongly correlated to jet crack.