Europe's second largest airline Lufthansa said tight travel budgets meant 2009 would be a bleak year, as it missed forecasts with a 64 per cent fall in 2008 net profit and nearly halved its dividend as the global downturn bit.
Germany's flagship carrier said today 2009 operating profit would fall considerably from the €1.35 billion made last year but remain in positive territory.
"The year 2009 will make great demands of us all," it said, adding earnings could improve again in 2010 if the market bottomed out late this year.
Rival British Airways said last week it expected an operating loss in its fiscal year through April 2010 and hinted it could cut jobs. Aer Lingus also said today it no longer expected to make a pre-tax profit in 2009.
Lufthansa shares were up 1.3 per cent at 8.30 euros by 0915 GMT.
Lufthansa's 2008 net profit slumped to €599 million, below the average forecast for €712 million in a Reuters poll.
It cut its 2008 dividend by 44 per cent to 0.70 cent, just above the 0.67 cent average forecast in the Reuters poll. Full-year revenue rose 10.9 pe rcent to €24.9 billion , above the forecast for €24.7 billion.
Lufthansa said passenger traffic fell 9.8 percent in February, with its load factor -- a measure of capacity utilisation -- down 3.3 percentage points.
Airlines are struggling to remain profitable as businesses and consumers cut travel during the recession. The world's airlines lost up to $8 billion in 2008, the International Air Transport Association said last week.
In addition, many carriers bet on rising fuel prices in 2008 and were taken by surprise when crude fell from an all-time high of over $145 per barrel to around $40. Airlines commonly hedge their exposure to fuel months in advance.
Lufthansa had to write off a fuel hedging deal it had struck with Lehman Brother, the collapsed US investment bank, last year when it also took a writedown on the value of its stake in US carrier JetBlue.
The carrier's two closest rivals, British Airways and Air France-KLM, are both expected to post losses over the next year.