I don’t ordinarily cover the financial results of the major European airline groups, because, well… there are only so many hours in the day. However, they are often interesting, and that includes the 2025 Lufthansa Group financial results that have just been released. In this post, I’d like to focus on the one aspect of these results that I find to be most noteworthy.
In this post:
Lufthansa Group margins range from 0.9% to 9.3%
For the 2025 financial year, Lufthansa Group is promoting how it achieved record revenue, though profitability is down slightly compared to 2024. That’s not too surprising when you look at the industry big picture.
But what I find most interesting is how each individual airline has contributed to Lufthansa Group’s profitability. In the presentation for investors, the airline group breaks down how each of the subsidiaries contributed to Lufthansa Group’s bottom line.
What’s perhaps most surprising is just how massively the margins vary. Going from most profitable to least profitable airline in the group (based on margins):
- SWISS had a €600 million profit on €6.48 billion in revenue, for a 9.3% return
- Eurowings had a €132 million profit on €3.08 billion in revenue, for a 4.3% margin
- Austrian had an €81 million profit on €2.54 billion in revenue, for a 3.2% margin
- Brussels had a €28 million profit on €1.65 billion in revenue, for a 1.7% margin
- Lufthansa had a €148 million profit on €17.1 billion in revenue, for a 0.9% margin
As you can see, “flagship” Lufthansa is the lowest margin airline in Lufthansa Group. SWISS is by far the most profitable, and it’s not even close, while Brussels is nearly 2x as profitable as Lufthansa, Austrian is more than 3x as profitable, and Eurowings is almost 5x as profitable.
Will Lufthansa finally be able to improve its margins?
Lufthansa has sort of had the perfect storm of issues in recent years, which have contributed to the carrier’s lack of profitability:
- The rollout of the new Allegris cabins has been a real challenge, and has been much more drawn out and costly than planned (and that says nothing of the actual money spent on the new cabins, plus the lack of density)
- Lufthansa’s fleet renewal was so heavily centered around the Boeing 777-9, but with that delayed by seven years and counting, the airline has kept around more old and inefficient aircraft
- Just generally, it feels like Lufthansa has kind of lost its groove when it comes to establishing competitive advantages, especially in comparison to carriers like Air France, which have nicely improved their product in recent years
Even so, it’s kind of wild to look at the massive profitability divide between Lufthansa and SWISS. You’d almost think there would be merit to Lufthansa Group shifting more resources to SWISS, though I also suspect the key to maintaining those margins is not flooding the market too much.
The irony is that Lufthansa Group is increasingly trying to centralize management functions in Frankfurt, so that individual airlines have less autonomy. All the airlines that previously had some autonomy had better margins than Lufthansa, so that seems like a questionable strategy.
Lufthansa management has been very critical about its lack of profitability, with CEO Jens Ritter even claiming that “without structural changes, there will be no prospects for Lufthansa Airlines.” At the same time, it always seems like this “we’re not profitable enough” line is used in order to increasingly outsource functions to subsidiaries with lower labor costs.
Anyway, Lufthansa Group management seems to think that a turnaround is right around the corner, and that 2026 will be the carrier’s year of success. We’ll see how that all plays out… I’m not holding my breath.
Bottom line
Lufthansa Group has reported its 2025 financial results, and what stands out the most is the variance in profitability between airlines in the group. At most airline groups, the “flagship” carrier is the one that’s also most profitable, but it’s exactly the opposite at Lufthansa Group.
Lufthansa is the lowest margin airline in the group, with a 0.9% margin. Meanwhile SWISS is on the other end of the spectrum, with a 9.3% margin. Lufthansa Group management insists that a new era for Lufthansa is right around the corner, though the airline certainly has a lot of ground to make up!
Swiss has tasteful premium cabins. Eurowings has low fixed costs and an endless stream of eager tourists. Austrian is a flying three-star restaurant. And Brussels posts solid yields on the four routes it flies.
Lufthansa has two fortress hubs and a hard product refresh so outdated that if it were a real seat, it would need replacing by now. And that's about it.
But fear not. Once ITA joins the family, even deadbeat Lufthansa will look like a spotless overachiever.
If you want it polished but still in your straightforward voice:
The film LH has always had the worst business class seat. From the awful angled lie-flats that stayed around forever, to the later "upgrade" to the 2x2x2 and 2x3x2 lie-flat layouts - long after 1x2x1 had already become the industry norm.
Then came the Allegris disaster, which still is not enough for me to take the chance of flying with them. I actively avoid...
If you want it polished but still in your straightforward voice:
The film LH has always had the worst business class seat. From the awful angled lie-flats that stayed around forever, to the later "upgrade" to the 2x2x2 and 2x3x2 lie-flat layouts - long after 1x2x1 had already become the industry norm.
Then came the Allegris disaster, which still is not enough for me to take the chance of flying with them. I actively avoid LH.
Premium Economy is also in the same cabin as Economy, with no divider. Granted, the price difference reflects this, but it is essentially Economy with a larger seat - so again, not really appealing. It's a no.
Basically, LH is a no for me, and many of my colleagues and friends.
Now multiply that by the many thousands of people who do the same, and you start to see the issue. Yes, they still have a captive audience, but that audience has been slowly slipping away for years.
The financial results reflect this.
This is totally unrelated to the post, however, just as a heads up, at some point in the last day or two, something on the backend has been own-blocking ads on OMAAT, at least outside the United States (trying from Spain where I live, but I suspect it's configured incorrectly for other regions. I don't see a single ad block anymore (and I have no ad blockers on/enabled). Just error messages.
Right now every ad...
This is totally unrelated to the post, however, just as a heads up, at some point in the last day or two, something on the backend has been own-blocking ads on OMAAT, at least outside the United States (trying from Spain where I live, but I suspect it's configured incorrectly for other regions. I don't see a single ad block anymore (and I have no ad blockers on/enabled). Just error messages.
Right now every ad block on the site shows an error 403 "The Amazon CloudFront distribution is configured to block access from your country. We can't connect to the server for this app or website at this time."
You probably wouldn't know about it, unless someone outside the US told you, but you would notice the random unexplained drop in ad revenue/pageviews. As someone who also runs a blog/site, figured you'd want to know. Cheers!
Same in the Czech Republic and Austria.
Blaming Allegris delays for a 0.9% margin is looking at this like a travel agent, not an equity analyst. Lufthansa’s problem isn't a lack of sliding doors in Business Class; it's structural labor liabilities and geography.
First, LH Mainline is a permanent hostage to German unions (Ver.di, UFO, VC). You can't run a profitable hub-and-spoke model when rolling strikes wipe out hundreds of millions in EBIT every single quarter.
Meanwhile, SWISS prints money...
Blaming Allegris delays for a 0.9% margin is looking at this like a travel agent, not an equity analyst. Lufthansa’s problem isn't a lack of sliding doors in Business Class; it's structural labor liabilities and geography.
First, LH Mainline is a permanent hostage to German unions (Ver.di, UFO, VC). You can't run a profitable hub-and-spoke model when rolling strikes wipe out hundreds of millions in EBIT every single quarter.
Meanwhile, SWISS prints money because they operate in a captive, hyper-premium market (Zurich finance/pharma) with highly inelastic demand. They collect revenue in strong Swiss Francs while leveraging LH Group's scale to pay backend costs in weaker Euros. And crucially, their labor force actually shows up to work.
Add in the German government's massive aviation tax hikes (Luftverkehrsabgabe) that artificially depress demand at FRA and MUC, and mainline LH's business model is structurally broken.
Group management knows this. That’s exactly why Carsten Spohr is desperately shifting capacity to Discover and City Airlines. He isn't trying to "turn around" the flagship brand; he is actively trying to bypass mainline labor contracts just to survive
I'm not going to disagree with your analysis but LH's customer experience sucks. See Sam73's comment below. LH used to be a fine airline that I looked forward to flying but now it plumbs new depths daily.
While I mostly agree with this, the CHF being so valuable is not always good. Lots of revenue is collected in other currencies. But the main point I agree with is "captive Market". The direct flight to and from Zurich are super expensive.
While they have some labor and the LH group cost benefit the 'highly inelastic demand' is less credible when faced with a material stress. Swiss Air filed for bankruptcy in the early 2000s, while Lufthansa didn't. Local demand wasn't enough to prop up Swiss. Yes it tried to expand by buying minority stakes in other airlines, but Lufthansa was also busy forming alliances.
LH is a perfect representation of Germany. Stucked in it's old ways
Perhaps it is also of consideration that Austrian manages to provide Lufthansa Group a healthy profit despite its proximity to the modern Munich hub of Lufthansa. It is hardly much more convenient to transit Vienna than it is Munich. Perhaps there is something to be learned from the management skill of Vienna and the commitment to quality premium cabin catering. Of course, customers who can afford to pay more will pay more for a better...
Perhaps it is also of consideration that Austrian manages to provide Lufthansa Group a healthy profit despite its proximity to the modern Munich hub of Lufthansa. It is hardly much more convenient to transit Vienna than it is Munich. Perhaps there is something to be learned from the management skill of Vienna and the commitment to quality premium cabin catering. Of course, customers who can afford to pay more will pay more for a better experience.
And now we wait and see how the Italians contribute to the group with ITA in the fold, so to say.
What’s shocking to me, but maybe someone can confirm. Isn’t LX much much much smaller than the LH airline (obviously isolating just LH operations from LH Group)? Basic searching online seems to indicate that LH is 3x larger to LX
Not sure how or why they believe they will see better profitability in 2026 with rapidly rising fuel costs. That is the largest expense in the airline industry after labor.
The only time I tried LH (because it was significantly cheaper than a SkyTeam flight, for which I have elite status), I was far from impressed: 2-2-2 in J (350), missed connexion, downgrade on the last leg, which LH refused to compensate (I had to claim it through arbitration/SRV). Let's say that I saw firsthand what's a malfunctioning airline...
If they delivery that well on a regular basis, no wonder no one wants to fly with them...
Perhaps non-ME3 carriers are about to see a boost as passengers seek alternatives that don’t connect through there. For reliability, I’d prefer Swiss or LH over EK and QR these days…
Where are Discover Airlines, Lufthansa City Airlines, Air Dolomiti, ITA and SunExpress? I can't find info on them
Moving more business to Swiss (LX) is easier said than done. One of the reasons of its profitablity is that Swiss only has one hub (ZRH) and operates the other main airport (GVA) as a mere niche product. And ZRH is heavily slot restricted. So more activity in ZRH is almost impossible and opening a secondary hub would largely destroy their cost basis.
There will be more capacity once the new terminal is built, but that is a long way out and there will be disruptions until then.
GVA is a shockingly garbage airport for such a great country
Gva is good enough for the traffic served and way less hectic than Zrh
I haven't been through GVA in ages but we travel as a group each year through ZRH and one buddy went through GVA last year. He said it was a terrible airport. He travels a lot as well..I thought it was funny. I remember it being ok, not terrible.
Not a surprise when LH business class seats are still predominantly 2-2-2, I don't know why anyone would want to fly them. All of their joint venture partners have strictly better seating than them.
I suspect your question is rhetorical but just in case it isn't:
Some travellers are more comfortable flying their national carrier.
Some travellers do not take the time to research other carriers that may be flying the same route.
Some travellers suck at the LH loyalty teat and will fly LH no matter how inferior the product and no matter how badly they are treated.