European airlines' shares rally on strong fourth quarter after tough 2024

By Joanna Plucinska

LONDON (Reuters) - Lufthansa and Air France-KLM's results connected Thursday showed signs the airlines were connected the roadworthy to recovery, with beardown request and a brighter outlook for 2025 helping nonstop their shares to the highest levels successful years.

Strong rider numbers and little substance costs helped the airlines bushed expert expectations successful the 4th quarter, aft some suffered from spiralling labour and attraction costs earlier successful the year.

At 1049 GMT, Lufthansa shares were up much than 7% portion Air France-KLM shares were up much than 19%.

"Looking back, 2024 was a twelvemonth of 2 halves for the Lufthansa Group. In the archetypal six months, we inactive had to header with a important diminution successful operating profit," Chief Executive Carsten Spohr said successful a statement.

European airlines struggled past twelvemonth arsenic ostentation and attraction of ageing fleets drove costs higher contempt sustained beardown demand, with shares dropping for astir of the main carriers connected the continent.

Only British Airways-owner IAG saw its shares rally passim the twelvemonth arsenic it benefited from robust transatlantic connections.

Analysts pointed to higher revenues and little depreciation arsenic helping Air France-KLM successful particular.

Air France-KLM said a driblet successful arrivals during the Paris Olympics and caller labour contracts had deed their results hard, successful a bid of unfortunate one-off events that dragged connected 2024.

Now, with request expected to proceed increasing into 2025 coupled with caller pitchy deliveries, some groups were hopeful they would beryllium capable to maximize their revenues and instrumentality vantage of expected little substance costs.

STILL WORK TO DO

Both hose groups person halfway carriers inactive successful request of a revamp. Dutch KLM connected Thursday deemed its ain yearly show "disappointing" and warned outgo pressures continued arsenic it prepared to shave disconnected 250 non-operational jobs.

For Lufthansa, the namesake hose slipped into the reddish successful 2024 with an operating nonaccomplishment of 94 cardinal euros ($101 million), and is present embarking connected a betterment plan.

Promising a "year of transition" successful 2025, the radical said Lufthansa Airlines was expected to marque a gross nett publication of astir 2.5 cardinal euros by 2028.

Air France-KLM pointed to hopes for renewed spending successful Paris, peculiar among Americans, arsenic good arsenic beardown results for its fund bearer Transavia.

"There are a fewer American tv shows which marque Paris look highly attractive...So from a gross perspective, we're optimistic that Paris is astir apt the astir charismatic destination successful each of Europe," Air France-KLM CEO Ben Smith told analysts.