Lufthansa's Hedging Math Clouds a Brighter 2027 Outlook

AlphaValue has raised its 2027 earnings forecast for Lufthansa by 22.7% to EUR 0.95 per share, yet the Paris-based research house is sticking with its "Sell" rating and a six-month price target of EUR 7.53 — a split verdict that hinges less on demand than on the calendar of the airline's fuel hedges.

The nuance lies in timing. Cheaper oil should ease the burden on carriers, but only once it feeds through to actual procurement costs; hedging arrangements and supply contracts delay that pass-through. AlphaValue expects the renewal of those hedges at today's prices to cut gains from hedging activities by roughly half in 2027 compared with 2026, warning of an added burden on the group that year.

That caution sits alongside a more constructive read on the business itself. The upgraded per-share figure rests on quarterly results published just over a week ago, which the analyst interprets as evidence of stabilisation rather than further deterioration. For 2026, the EPS estimate slips marginally from EUR 0.88 to EUR 0.87, meaning the meaningful upward revision applies only to the following year.

A Guidance Floor That Leaves Little Room

On the operating side, AlphaValue puts adjusted EBIT for the current year at around EUR 1.72 billion — the bottom edge of Lufthansa's own target range of EUR 1.7 billion to EUR 2.0 billion. The gap to the lower bound sharpens the focus on cost control. According to the Wall Street Journal, the airline managed to offset the additional fuel expenses of the past quarter through savings and higher revenues.

The quarterly figures bear that out. Revenue rose 9% year on year to EUR 12.2 billion in the third quarter of 2026, while adjusted operating profit climbed 6% to EUR 1.4 billion, beating analyst expectations according to n-tv. Fuel costs, however, ran EUR 543 million higher than a year earlier, and management pegged the full-year fuel bill at EUR 9.3 billion.

Two Brokers Move in the Opposite Direction

Not every analyst shares AlphaValue's restraint. Barclays upgraded Lufthansa from "Underweight" to "Equal Weight" on Friday and lifted its price target from EUR 7.50 to EUR 8.40, with analyst Andrew Lobbenberg citing falling fuel costs for his more optimistic sector view. Bernstein also raised its target that day, from EUR 9.00 to EUR 9.50.

The shares rose 3.9% on Friday against a weak broader market, with dpa-AFX attributing the move to a re-rating of European airlines — though no single trigger for the gain is firmly established.

TAP Contract Signed, Brussels Still to Decide

Beyond the earnings debate, Lufthansa and the Portuguese government signed the contract just over a week ago for the planned acquisition of an initial 44.9% stake in TAP Air Portugal. The purchase price is EUR 1.02 billion and could rise to as much as EUR 1.2 billion once a ticking fee is taken into account. Completion remains conditional on, among other things, approval from the European Commission.

Weighing the raised profit estimate against the risk of shrinking hedging gains, AlphaValue's stance leaves the recovery question open: how much of the improvement survives the added costs will depend on whether Lufthansa can keep offsetting cost pressure through operations.