Airlines are living through an absolute nightmare as costs skyrocket, while they are also openly threatened by fuel shortages as the Strait of Hormuz remains closed. Germany's largest airline, Lufthansa, expects to incur additional fuel costs of €1.7 billion (nearly $2 billion) this year as the conflict in the Middle East creates "massive challenges." At the same time, approximately 2 million passenger seats have been "cancelled" from May flight schedules.
Extra cost of €1.7bn for Lufthansa
In more detail, Lufthansa announced that it expects to be burdened with additional fuel costs of approximately €2 billion in 2026. In its Q1 results, the airline reported that it has hedged 80% of its fuel. It expects to undertake an additional cost of €1.7 billion in 2026, which it plans to offset through cost-saving measures and increased revenue from ticket sales.
Lufthansa announced that operating losses (adjusted EBIT) for the first quarter amounted to €612 million, while revenues rose to €8.7 billion, marking an 8% increase compared to the €8.1 billion in the first quarter of 2025. Net profits stood at €665 million, compared to €885 million the previous year. "During the first quarter, we significantly improved financial results compared to the previous year," said Lufthansa CEO Carsten Spohr. "However, the ongoing crisis in the Middle East, combined with rising fuel costs and operational constraints, poses enormous challenges for the world as a whole, for global air transport, and for our company. Nevertheless, we remain resilient in our ability to absorb these impacts."
Fuel shortage in Europe
Europe is facing a severe shortage of jet fuel due to the ongoing blockade of Hormuz. The head of the International Energy Agency (IEA), Fatih Birol, warned last month that the continent is just weeks away from running out of reserves. At the same time, jet fuel prices surged 103% by the end of March compared to the previous month, according to the International Air Transport Association (IATA).
"Scissors" to airline flights
Lufthansa has already cut 20,000 short-haul flights in an effort to save 40,000 tons of fuel and eliminate unprofitable routes. Meanwhile, other European airlines have been hit by the explosion in fuel costs. British carrier EasyJet reported that it was burdened with £25 million ($34 million) in extra fuel costs in March, with total pre-tax losses ranging between £540 million and £560 million for the half-year ending March 31. The low-cost airline stated that customers are now delaying bookings, with demand for the rest of the year appearing weaker than last year. EasyJet has also hedged 70% of its fuel for the summer, leaving the remaining 30% exposed to volatile fuel prices.
The IEA's Birol pointed out that as the peak travel season approaches, demand for jet fuel will be 40% higher than in March. Middle East refineries provide approximately 75% of Europe's jet fuel. "The rest comes from some large Asian countries that have now imposed export restrictions, and Europe is now trying to source fuel from the US and Nigeria. If we fail to secure additional imports to Europe from these countries immediately, we will find ourselves in a difficult position," Birol said.
"Deletion" of 2 million passenger seats
In the meantime, according to data from airline data analysis firm Cirium, cited by the Financial Times, the fuel supply crisis has already led to the loss of approximately 2 million seats from May flight schedules. The total number of available seats dropped from 132 to 130 million in just a few weeks, while approximately 12,000 flight cancellations have been recorded. As noted by the International Air Transport Association (IATA), the average price of jet fuel reached $181 per barrel, recording a 1% increase in one week after months of intense fluctuations.
Smaller aircraft being deployed
Beyond Lufthansa, Air France-KLM has also significantly reduced its capacity. In Asia, Air China restricted domestic routes, while in North America, Spirit Airlines has already suspended operations in a landscape largely attributed to the fuel crisis.
The Commission warns airlines and member states to prepare for all scenarios. "No one knows how long this situation will last. The most effective thing we can do is to prepare for all eventualities," said Commission spokesperson Anna-Kaisa Itkonen. The Commission is expected to issue guidelines within the week, which will include rules on fuel conservation, passenger rights, and technical fuel specifications.
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