Lufthansa Bets on Japan Expansion to Offset a Ballooning Fuel Bill

Lufthansa keeps 2026 profit guidance of €1.7bn–€2.2bn while planning up to 50 weekly Japan flights for summer 2027 amid higher jet fuel costs.

Lufthansa is pressing ahead with a significant build-out of its Japan network even as geopolitical turmoil inflates its kerosene costs, a twin-track strategy that pits long-haul growth against one of the sharpest expense shocks the carrier has faced in years.

Chief executive Carsten Spohr has made clear that the fuel-related extra burden for the current year, 2026, will likely exceed the 1.5 billion euros previously pencilled in. The culprit is the spike in jet fuel prices triggered by the Iran conflict. Should the trend hold, Lufthansa's total fuel bill could climb past 8.7 billion euros. Spohr conceded the group would be relieved if the additional load stayed at the original 1.5 billion-euro mark — a sign of just how much uncertainty hangs over the cost line.

Earnings Target Held Firm

Despite the pressure, management is not walking back its guidance. The MDAX-listed group still expects adjusted operating profit of between 1.7 billion and 2.2 billion euros for 2026. That range sits below the prior indication of a result above the previous year's 1.96 billion euros, but it keeps the carrier in profit territory. Support is coming from the summer passenger business, where demand — particularly in the high-margin premium cabins — has proven resilient. That revenue cushion is doing much of the work while the company tries to rein in expenses elsewhere.

Up to 50 Weekly Japan Flights on the Drawing Board

On the revenue side, Lufthansa is betting big on Asia. For the summer 2027 schedule, the group will expand its Japan programme to as many as 50 weekly connections, with bookings opening today. Four destinations are planned: Tokyo-Haneda, Tokyo-Narita, Osaka and Nagoya.

Frankfurt–Nagoya and Frankfurt–Tokyo-Narita are slated to be served by Boeing 787-9 long-haul jets featuring the new Allegris cabin. Group subsidiary SWISS will also link Tokyo-Narita the summer after next. Further travel options will come through joint-venture partner ANA. The move is a direct response to shifting travel patterns and a push to deepen the group's footprint in the lucrative Far East market.

Analysts See Margin Squeeze, but Also Leverage

The brokerage community is weighing the same two forces. Bernstein Research has reaffirmed its "Market-Perform" rating on Lufthansa shares with a 9-euro price target, a call dated 24 September. Analyst Alex Irving expects a mixed picture across European carriers: solid demand, especially on North Atlantic routes, is underpinning revenues, while the recent run-up in jet fuel prices is eating into margins.

Barclays analysts take a similar view, anticipating that airlines will adjust their winter capacity plans cautiously as long as kerosene prices stay elevated. For Lufthansa specifically, they foresee a restrained approach to winter capacity, with revenue per available seat kilometre taking clear priority. At the same time, the Barclays team sees the group holding a strong negotiating position in upcoming ground-handling agreements at its Frankfurt home hub.

Ownership Structure Stays Within Legal Limits

Away from the operating story, Lufthansa reported stable shareholder conditions. As of the 30 September reference date, German investors held 67.1 percent of the capital, while US investors accounted for 17.7 percent. Other holdings included Luxembourg at 3.9 percent and Ireland at 3.6 percent. Just under a third of the shares therefore sit abroad. The company continues to meet all requirements of the aviation traffic safeguarding law, which is essential for retaining its international traffic rights and operating licences.

Share Price: Stabilising but Still Well Off Its High

In the market, the stock was recently quoted at 7.58 euros, a modest gain of 0.5 percent on the day, though pre-market indications had put it at 7.55 euros — a decline of 10 percent since the start of the year. Against its 52-week high of 10.27 euros, the shares remain 26 percent below peak. The group, for its part, is working operationally to shore up its earnings power, even as cost headwinds and geopolitical risk continue to shape the investment case.