This article first appeared on GuruFocus.
Lufthansa (DLAKY), the German airline group behind Lufthansa, SWISS and Austrian Airlines, ran into heavy selling on Tuesday after management slashed expectations for next year. The stock crashed 10.8%, putting it on pace for its worst one-day decline since 2021, after the company ditched its earlier forecast for meaningful profit growth and replaced it with a much wider target. Lufthansa now expects 2026 adjusted operating profit of 1.7 billion to 2.2 billion, a dramatic change from its previous guidance that called for earnings comfortably above the 1.96 billion delivered in 2025. Investors weren’t just disappointed by the lower outlookthey were rattled by how uncertain management suddenly sounded.
The culprit wasn’t weak demand. Travelers are still flying, planes are fuller and ticket prices have improved. The problem is that soaring fuel costs following the Iran conflict swallowed those gains, leaving second-quarter operating profit below expectations. At the same time, customers are waiting much longer before booking flights, shrinking Lufthansa’s booking window and making it far harder to predict revenue. That’s a dangerous combination for an airline, where fuel is one of the biggest costs and forecasting demand is critical. The midpoint of the new profit range sits at 1.95 billionalmost identical to last year’s resulteffectively telling investors that earnings growth has stalled.
Lufthansa Stock Tumbles 10.8% as Iran War Hits Profit ยท us.finance.gurufocus
The GuruFocus valuation chart doesn’t offer much of a cushion either. The stock trades around $9.77 versus a GF Value of $9.30, putting it roughly 5% above fair value. That’s hardly expensive, but it’s also not cheap enough to justify paying a premium while management is cutting guidance and widening its earnings range. When expectations fall and uncertainty rises, even a modest valuation premium can disappear quickly. Lufthansa is still targeting an 8% to 10% adjusted operating margin by 2028-2030, but investors will want to see lower fuel costs and a more predictable booking environment before betting that goal is back within reach.