Lufthansa warns on profit
|
|
June 16, 1999: 10:08 a.m. ET
German airline's shares tumble over 5%; analysts aren't surprised
|
LONDON (CNNfn) - Shares in German airline Lufthansa plunged over 5 percent in Frankfurt Wednesday after the carrier issued a thinly-veiled profit warning.
Lufthansa CEO Jürgen Weber told shareholders at the airline's annual meeting the carrier will have to lower its 1999 earnings forecasts unless business improves rapidly.
"This is clearly a profit warning. The world isn't getting any better and yields are only going one way -- down," Chris Tarry, airline analyst at Commerzbank in London, told CNNfn.com.
"This has come as no surprise, as management has been warning institutional shareholders for some time," said Andrew Light, airline analyst at Salomon Smith Barney, in London.
However, this was the first time Lufthansa admitted in public that it is unlikely to meet its forecast of 2 billion marks ($1 billion) in pre-tax earnings for the current year.
Weber blamed increased competition across the Atlantic as one of the main factors that will hit earnings. Analyst believe the airline will have to cut its forecasts to about 1.7 billion marks.
Light believes factors other than the profit warning hit the stock Wednesday. Investors are nervous that Lufthansa will lose its place in the Dow Jones Eurostoxx index of the 30 leading European companies.
He also suggested companies with any negative news were getting hit extra hard Wednesday ahead of the U.S. inflation data. "Now that the CPI data came in better than expected, the shares are bouncing off their session lows," said Light.
Lufthansa's shares hit a low of 18.55 euros, down 1.01 euros from Tuesday's close, but recovered following the release of the U.S. data to trade down 3 percent at 18.96 euros.
|
|
|
|
Lufthansa
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
|
|