Europe’s largest airline group, Lufthansa, is sounding the alarm over soaring jet fuel costs that now threaten its full-year financial performance.
Jet fuel prices have roughly doubled since US-Israel strikes on Iran began on February 28, with kerosene trading at approximately $160 per barrel, up around 77% year-on-year.
Lufthansa Group has cut its 2026 earnings guidance after a steep drop in second-quarter results, sending shares tumbling and rattling European aviation markets.
The airline group, which owns Swiss, Austrian Airlines, Brussels Airlines, Eurowings, and ITA Airways, now expects 2026 adjusted earnings before interest and taxes of between €1.7 billion and €2.2 billion.
That range marks a significant retreat from earlier guidance of a result “significantly above” 2025’s €1.96 billion, with management pointing to sustained jet fuel price pressure as the primary driver.
Lufthansa estimates its full-year 2026 fuel bill at roughly €8.66 billion, with approximately 86% of this year’s fuel needs already hedged against price swings.
To limit further exposure, the group plans to retire its Airbus A340-600 fleet ahead of schedule and temporarily ground two Boeing 747-400 aircraft starting with the winter flight schedule.
On April 21, 2026, Lufthansa Group announced it would remove approximately 20,000 short-haul flights from its schedule through October, the largest single schedule reduction by a European airline since the COVID-19 pandemic.
The capacity cuts fell disproportionately on Frankfurt and Munich, the group’s two largest and most strategically important hubs in Germany.
Europe is urgently turning to alternative suppliers of jet fuel as imports from the Middle East remain severely disrupted by the ongoing conflict involving Iran.
Analysts have warned that financial hedging strategies may prove insufficient if physical fuel supply itself becomes constrained rather than merely expensive.
“The distinction is critical,” analysts noted. “Paying more for energy is manageable; not having it is existential.”
The aviation sector across Europe faces a difficult balancing act as airlines attempt to pass rising fuel costs onto travelers without triggering a significant drop in passenger demand.
