Carsten Spohr, CEO of Lufthansa, said that the additional bill for aviation fuel that the company will bear this year will exceed the 1.5 billion euros ($1.70 billion) mark that it had announced in August - in light of the continuing tensions related to Iran and the rise in oil prices.
The German group is the latest to join the list of airlines - including Ryanair - that warn of the repercussions of the continued rise in aviation fuel costs on this sector, as the cost of fuel constitutes between 30 and 40 percent of the total expenses of airlines.
Spohr told reporters during a media event in Frankfurt on Monday evening: “The amount of 1.5 billion euros that I mentioned a few months ago as the additional fuel burden... the number that we will most likely have to announce at the end of the year will be higher than that.”
Spohr did not specify the size of the new additional fuel cost burden that the company expects.
The company announced in August that it expects total fuel costs for 2026 to reach about 8.66 billion euros - a figure that includes the additional burden of 1.5 billion euros - compared to previous expectations that indicated 8.9 billion euros, and it also warned that profits may be affected by this.
Lufthansa has succeeded in protecting itself to some extent from fluctuations in aviation fuel prices through extensive price risk hedging operations. The group's fuel hedging ratio was 86 percent for 2026, and just over 50 percent for 2027, Till Streichert, the group's chief financial officer, told analysts in August.
Despite the expected increase in fuel costs, Spohr reiterated the company's expectations of achieving operating profits ranging between 1.7 billion and 2.2 billion euros, compared to 2 billion euros in the previous year. He added that the company's ambitious transformation program - which aims to achieve an operating margin of between 8 and 10 percent by the period between 2028 and 2030 - has been affected by the increasing costs facing the sector.
Spohr said: “Financial performance has not yet led to the desired results this year, due to the obstacles related to fuel costs that everyone had to deal with.”
Despite these challenges, Spohr pointed out that there is a boom in bookings for premium economy and business class cabins, which reflects a similar trend observed by competing companies such as Air France-KLM and IAG, which owns British Airways.
On Tuesday, Britain issued record 10-year government bonds with the highest yield for bonds of this duration since 1999, at a time when borrowing costs are witnessing a global rise that is placing great pressure on British public finances.
The British Debt Management Office said that it sold 10-year Treasury bonds worth 4.25 billion pounds ($5.62 billion), with an average return of 5.383 percent, which is the highest return rate recorded by any bond auction of this period since September 1999, when 10-year debt was sold with a return of 5.694 percent, according to Reuters.
Investors placed purchase orders equivalent to 3.34 times the size of the bonds on offer, in line with the relatively strong demand for British bonds at auctions this year.
On Monday, the 10-year British bond yield in the secondary market reached its highest level since July 2007 at 5.441 percent. But no new 10-year bonds were offered when yields reached those levels, making Tuesday's auction result the highest yield for bonds of that duration since September 1999.
Earlier this month, Britain borrowed at its highest cost since 1998 when it sold 30-year bonds worth £4.25 billion. However, Britain currently relies to a much greater extent on issuing debt with maturities approaching 10 years, which may make the outcome of Tuesday’s auction more important for public finances.
The rise in inflation and interest rates at central banks after the outbreak of war with Iran, along with the rise in government borrowing in the United States, Germany and France, led investors in bond markets globally to demand higher returns.
British Finance Minister John Healey said at the annual conference of the ruling Labor Party on Monday that financial discipline will be the focus of his first annual budget statement next month.
But the government is having difficulty reining in the continuing rise in the costs of state pensions and other social welfare spending, and has committed not to increase headline tax rates.
New Prime Minister Andy Brenham also wants to increase spending on defense and social care, and faces pressure in the near term to provide support for households' energy bills.
US stock index futures moved in a narrow range on Tuesday, with technology stocks and companies related to artificial intelligence rising slightly, while rising oil prices and high bond yields limited investors' appetite for risk, in the absence of progress in peace talks between the United States and Iran.
The Dow Jones Index fell 0.07 percent, the Standard & Poor's 500 fell 0.04 percent, while the Nasdaq rose 0.06 percent, according to Reuters.
Investors highlighted technology stocks, after the prospectus for the public offering of Anthropic, which the agency reviewed, showed that the artificial intelligence laboratory achieved strong growth over the past year, coinciding with the widening of its losses.
Anthropic is targeting a valuation exceeding two trillion dollars in a public offering, which could make it a benchmark for Wall Street’s evaluation of the most prominent artificial intelligence companies.
Most chip companies rose slightly in pre-market trading, after a widespread selling wave that the sector witnessed on Monday. Shares of Marvell Technology, Micron Technology, and Broadcom rose about 1 percent each.
“Nvidia” shares rose 0.7 percent, continuing the gains recorded on Monday, after the company, which is the most valuable in the world, raised the ceiling of its share buyback program by a record amount of $150 billion.
Artificial intelligence remains a major focus of Wall Street’s attention, as it contributed to the bulk of the market’s rise that began in October 2022. Investors are also awaiting statements by OpenAI CEO Sam Altman during the “Dev Day” event that the company is holding later today.
By 05:06 a.m. EDT, Dow Jones mini futures contracts were down 37 points, or 0.07 percent, S&P 500 mini futures contracts were down 2.75 points, or 0.04 percent, while Nasdaq 100 mini futures contracts were up 18.75 points, or 0.06 percent. The hundred.
On Monday, the Standard & Poor's 500 index recorded its largest daily decline in percentage terms since late August, after technology stocks came under pressure amid geopolitical uncertainty.
“Markets are waiting for a breakthrough, or at least clarity, on the war, which should support sentiment,” said Kyle Rodda, senior financial markets analyst at Capital.com. But this is unlikely to happen any time soon.”
Oil prices rose for the second session in a row. US President Donald Trump said that he did not offer Iran anything to end the war, denying media reports based on US officials that he was ready to ease sanctions and release frozen funds in exchange for taking “tangible steps” regarding the Iranian nuclear program.
Fears that rising energy prices will stoke inflation and prompt central banks to raise interest rates have loomed over global markets recently, putting pressure on stocks and other high-risk assets.
The 10-year US Treasury bond yield stabilized near its highest level since 2007, indicating market expectations of tightening monetary policy in the future.
Economic data has become widely watched recently, after the Federal Reserve reduced its comments on future monetary policy moves under its Chairman, Kevin Warsh. Traders currently see a 70 percent probability of raising interest rates again in October, according to the CME Group’s “Feed Watch” tool.
Job openings data for August is due later Tuesday, the first of several economic data set to be published this week.
At least six Federal Reserve officials, including New York Fed President John Williams, are scheduled to make statements on Tuesday.
Among other active stocks, Summit Therapeutics jumped 22.4 percent, after the biotechnology company announced that the British pharmaceutical company “AstraZeneca” would invest two billion dollars in it and cooperate with it in a series of studies to test the two companies’ cancer treatments.
PepsiCo shares fell 0.7 percent after JP Morgan downgraded the stock to “neutral” from “overweight.”
