Operator
Good day and thank you for standing by. Welcome to the Lufthansa Group Q1 2026 Results Analyst Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Mark Nettesheim. Please go ahead.
Yes, thank you very much and welcome ladies and gentlemen also from my side to the presentation of our first quarter results 2026. With me today are our CEO Carsten Spohr and our CFO Till Streichert. Both of them will present our results further first quarter and discuss the commercial outlook for the remaining nine months of this year and afterwards as always you will have the opportunity to ask questions and please limit your questions to two so that everybody has a chance to participate in the Q&A session. Thank you very much and with that Carsten now over to you.
Yeah Mark thank you very much and a warm welcome from me as well. It's yeah exactly two months since we presented here from this building our full year 2025 results to you and i think you would agree that the dynamics of recent weeks have once again demonstrated how rapidly the environment for our industry can change and how vital it is in our industry to be ready for crisis management at any given time the ongoing crisis in the middle east combining combined with rising fuel costs obvious operational constraints poses enormous challenges for the world at large, for global aviation, and surely for our company specifically. Historically, though, the Lufthansa Group has grown through crisis and emerged from them stronger, so we are confident that this will also be no different this time. For one, we are positioned with greater resilience than many of our competitors to absorb the impact of the iran war we are better hatched against fuel prices with more than 80 percent of the kerosene requirements for our passenger airlines for the current year and more or less 40 percent for the coming year being hatched as we speak equally important to our crisis resilience is our unique multi-hub and multi-airline structure it gives us the flexibility to quickly adapt our network to shifting demand by consolidating how destinations are served across our hub system routes that become uneconomical for example due to rising cost can be cut without compromising our network quality this way we were able to almost fully offset the recent one percent capacity reductions which was equivalent to 20 000 flights for the whole summer and we actually only had to remove four destinations from our network of 300 at the same time this reduces our fuel requirements in the 20 percent share that remains unhatched even for us so every ton of fuel we save by cutting capacity is a ton of fuel at currently twice the price of last year this strategic setup also gave us the flexibility to drive forward our fleet modernization in an accelerated fashion and that obviously was shown in the city line kind of example where in the light of cost pressure driven by rising fuel prices on the one hand and labor disputes on the other hand we just decided we had to act and this included retiring aircraft with the highest operating cost per seat which was our cannot air fleet delivering immediate savings through the reduction of an entire sub fleet and finally our multi-hub and multi-airline structure demonstrated its strength most recently during the strikes of our cabin staff in lufthansa classic and lufthansa city line combined with our pilots where despite significant cancellations at the core brand more or less 75 to 80 percent of the group's entire flight program could be maintained in each case and served our customers to get them to their desired destination by the way the recent grounding of our loss making lufthansa city land operations has been after the closure of sun express germany and german wings the third and final step in our previously announced strategy to consolidate the number of passenger aocs in germany we have now reached our envision structure our main line and our feeder airline for frankfurt and munich one airline focused on leisure and a specialist for point-to-point traffics bypassing our hubs so as you can see we are responding with a necessary resolve not only in light of the dynamic developments arising from the iran war we hope for the same determination from the regulatory side both national and european levels when we see necessary changes due to the situation in Iran. In particular, we have three requests for action on part of the European Commission. First, we need quickly the authorizing of the import of Jet A fuel from the US, which is used there at every airport, rather than the Jet A1 fuel, which is currently required out of europe this would require less refinery activity because currently all kerosene imported from the u.s coming in jet a quality needs to be refined again to be turned into a one jet a1 quality which is no need especially in the summer when the different freezing points don't matter secondly we believe that it's time to advocate and decide on the temporary suspicion suspension of slot regulations at airports in case there is the need to cancel flights due to fuel shortages we shouldn't have an impact on slots and last but not least we need an exception for the european anti-tankering rules which would then allow us additional operational flexibility in case single airports in our short hole network are becoming shorter fuel overall we're quite optimistic these rules and adaptions won't be required because we maintain a certain optimism on the fuel situation but it's better to be ready including our regulatory bodies which sometimes need some time these gentlemen even in this volatile environment we achieve what we set out to do this is why we can look back on the first quarter today in which we significantly exceeded the prior year's financial results. As a result, adjusted EBIT came in 110 million euros above the prior year figure. This, by the way, without any capacity growth in our network airlines. At the same time, Eurowings' capacity grew by 5 percent. Lufthansa Technik delivered double-digit revenue growth numbers and Lufthansa Cargo achieved a 5 percent increase in revenue over here as well therefore total revenues reached 8.7 billion euros in the first quarter which is up eight percent compared to last year this is the highest we've ever seen for first quarter and shows that demand in our industry remains robust and that's for sure something we have not always seen in times of geopolitical crisis we saw additional momentum building in March with network airlines RASC up 12 percent and air freight yields increasing by five percent year over year. This underlines our ability to flexibly profit from elevated demand levels. Obviously higher fuel prices had only a marginal impact in the first quarter as most volumes were still priced at pre-crisis levels. Our fleet renewal progressed as planned with a delivery of seven new aircraft including five white bodies which of course are all equipped with Allegra's or Swiss senses depending on which airline they went to we not only increase the share of new technology aircraft in our fleet but we also enhance the travel experience for our long-range customers the strong commercial performance we delivered in the first quarter as did several of our competitors is as mentioned also evidence of a continuous robust market and resilient demand in our industry which again has seen very different behaviors in global crisis in the past. It's also against this backdrop of optimism that we announced two months ago that we would grow our long-haul business while at the same time consolidating our European network to become more efficient and we have delivered on that commitment. In Q1 we expanded our long-haul capacity by 1.4 percent year over year and simultaneously without reducing our feeding capabilities reduced short haul by three percent we also as announced focus on the southern hemisphere as a key growth market here also as the mentioned we delivered on our promise capacity to south america or latin america grew by four percent and to africa by an even stronger 10 it was sold very well with both seat load factors rising and average yields average yields increasing accordingly the situation the middle east was particularly challenging early march marked a turning point in the quarter as the iran conflict escalated and required swift adjustments the disruption constrained airspace availability led to reduction in leisure destinations especially in the gulf region and also limited connectivity of the hubs located in that region at the same time the overall travel demand remained consistently strong however the travel behavior of passengers shifted regarding where they fly to and very much how they reach their destinations we therefore reacted fast and adjusted our network accordingly the cancellations of the middle east routes freed up 13 aircraft they are three white bodies which we now use for additional frequencies to serve india and singapore especially in total 13 flights every week on top of our regular network we're currently offering to asia and obviously we also immediately adjusted our commercial strategy prioritizing yields over volume we tightened the availability of lower fair classes wherever appropriate and implemented broad based pricing measures march and april validated that focusing on this yield discipline was right in march yields increased by five percent and seat load factors improved by six percent year on year once again premium demand showed a very positive development in the first quarter yields our premium cabins rose by almost two percent compared to last year and by five percent in march alone and don't forget on this that when the iran war started of course a big part of the march seats were already sold so this is purely driven by the remaining seats being sold at higher pairs and this once again confirms our conviction that investments in premium products are not cyclical but are long-term value drivers for the Lufthansa Group. Looking ahead, we expect the positive demand trend to continue. Later, Till will walk you through the numbers showing how this translates into our current positive booking outlook. But first, let me quickly take you through the results of our four business segments. In the first quarter our network airlines were able to make good progress average fuel prices were below the prior year level still but the demand shifts driven by the iran war were already having a positive effect in the last month commercially this translated into a stronger performance revenue increased year on year and adjusted ebit improved by 135 million euros the main driver of the improvement was Lufthansa Airlines which contributed 110 million euros earnings improvement or if you exclude the strikes even close to 150 million euros. This demonstrates that the turnaround program is increasingly delivering results. Swiss also reported an improvement of 49 million euros and at ITER Airways the operating result also improved here by 70 million euros However, our equity result, based on ETA's earning after-tax, declined by €38 million due to currency effects. Unit costs increased by 2.5% across network airlines, broadly in line with inflation. This was primarily due to the very low ASK growth of only 0.1%, which of course doesn't help on reducing unit costs. but this enforces our decision to implement our strategy as quickly as possible in response to current and potential future cost headwinds. The commercial performance is clearly encouraging. RAS increased by 3.3%, regional RAS even by 4.2% versus prior year. High load factors and increased revenues from flight-related ancillary services supported this encouraging trend. ancillary revenues were mainly driven by our digital channels and rising advanced seat reservations for our new Lufthansa Allegris and Swiss Census cabin. We didn't have an easy start here but our upsetting strategy now clearly pays off and both trends show that we focus on the right topic namely digitalization and premiumization. Let me now turn to Eurowings. Operationally and commercially the first quarter delivered strong top line momentum as already mentioned capacity increased by five percent year on year despite the ongoing constraints related to the middle east in the third month but demand clearly outpaced this growth even traffic revenues therefore rose 14 and the seat load factor improved to a strong 84.4 percent supported by disciplined pricing unit revenues increased by almost seven percent and here as mentioned a strong intra-european business more than offset the revenue shortfalls in the middle east in march in addition flight related ancillary revenues rose by 13 percent versus last year also here mainly driven by seating options and upgrades and baggage on the cost side however we face significant headwinds compared to previous year as a result unit cost increased by five percent mainly driven by 16 million euros higher iric impact from winter operations and the middle east cancellations as well as 29 percent higher mro expenses despite these cost pressures euro wings delivered an adjusted ebit broadly stable year on year if you take the whole point to point airline segment the overall result was 14 million euros below prior year due to a 10 million below year delivery of sun express taking everything into account this we believe is a solid result for our point-to-point segment in a challenging environment this brings me now to a sector that usually benefits from volatile markets and short-term shifts especially talking about lufthansa cargo they delivered another clear year-on-year earnings improvement in the first quarter with operational momentum strengthening toward the end of the year the sort of the quarter sorry tight market supply and ongoing disruptions in global supply chains supported a recovery in air freight yields compared with recent quarters driven in particular by continued strong performance in asia pacific lufthansa cargo expanded its capacity by seven percent supported by higher belly capacity including for the first time additional marketing of itas airways belly spaces which are equivalent to three boeing triple seven freighters alone at the same time load factors remained broadly stable year on year total revenue increased by five percent while operating expenses rose by three percent higher charter costs primarily due to increased fuel costs especially as we don't hedge in the cargo segments were a cost driver unit costs decreased by seven percent thanks to lower mro expenses and strict cost management all in all profitability improved significantly with adjusted ebit up 35 percent year on year resulting in an adjusted EBIT margin of 9.5 percent. Last but of course not least our success story of Lufthansa Technik which likewise continues to be characterized by strong resilience with its revenues providing a sustainable stabilizing effect across our portfolio for quite some time now. Its recurring revenue streams stabilize our portfolio and Lufthansa Technik continues to experience robust demand and takes actions to mitigate headwinds for example from a weak US dollar, US tariffs and still ongoing supply chain burdens. The completion of Lufthansa Technik's 1000 Pratt & Whitney GTF engine overhaul marks a significant operational milestone and underscores the industry's structural shift towards next generation engines strategically we are advancing our global expansion where it matters most in the americas for example with progress on the tulsa oklahoma component repair facility or our new engine shop in calgary in asia by strengthening our market position with the signing of our largest maintenance contract to date in china for the cfm 56 engine or in the growing defense sector where the first completed maintenance of the german navy's p8 poseidon aircraft marks an important milestone for growth in this segment from a revenue perspective lufthansa technique remains structurally strong with around now 80 percent of first quarter revenues attributable to third-party customers and these external revenues grew by 19% year-on-year. On the cost side, Lufthansa Technik was facing increases in material expenses driven by both volume and pricing effect. This resulted in a 12% increase in operating expenses. The adjusted EBIT was broadly in line with the prior year level overall. However, margins were impacted slightly by ramp-up costs. For the coming quarters, we anticipate a meaningful recovery in margins compared to prior year after having examined the q1 results let me comment on where we stand from a strategic perspective in the midst in the midterm this means as you know 28 to 30 we target our eight percent adjusted ebit margin and the crisis makes us execute our strategy even faster than originally planned the good old never waste a good crisis obviously applies to Lufthansa Group as well. In response to sharply increased kerosene prices following the Middle East situation, we decided to push forward several measures to streamline our operations. This includes the immediate removal of Lufthansa's City Lines 27 operational aircraft from our schedules, leading to a broadly 1% ASK reduction. The phase-out of city lines canadares to harmonize our fleet and reduce by reducing another sub fleet and therefore also reduce operational complexity the announced early retirement of our not most fuel efficient long haul aircraft like the 340 600 by the mid-october time frame and also grounding part of our 747 400 fleet at least for the winter all of this reduces fuel consumption lowers exposure to unhatched fuel prices, streamlines the fleet and makes us structurally more competitive. In other words this crisis has acted as a catalyst bringing forward decisions that were already strategically planned.
And with having said that I hand over to Till who will guide you through the Q1 financials of the group, will guide you through our full year guidance and of course the underlying rationale till over to you yeah thank you carsten and uh good morning everyone let me take you through the financial performance of lufthansa group in the first quarter of of this year and provide some context on cash flow the balance sheet and of course most importantly our outlook for the rest of the year so let me share some details on our group pnl in the first quarter revenues increased by 7.6 percent year on year to 8.7 billion euro despite broadly flat capacity with ask growth of just 0.5 percent versus prior year this was primarily driven by higher passenger revenues continued strength in cargo volumes and a very strong mro growth where third-party revenues increased at a double digit rate in addition We benefited from structurally higher ancillary revenues, while irregularity-related compensations weighed slightly on revenues, reflecting the Middle East situation, and strikes. The three days of strike in Q1, which we faced, impacted our result by approximately €40 million. euro commercial performance was strong premium demand held up well cargo yields recovered materially towards the end of the quarter and flight related ancillary revenues grew by eight percent and as a result adjusted ebit improved by 110 million euro compared to prior year reaching minus 612 million euro and the adjusted ebit margin improved by almost two percentage points This improvement was achieved without capacity growth at our network airlines, underpinning the improvement in earnings quality. The difference between adjusted EBIT and reported EBIT is largely explained by book gains, particularly a 154 million euro book gain from the sale of one Boeing 747-8. let me now briefly touch on cash generation operating cash flow was strong in the first quarter driven primarily by working capital effects and the main contribution came from advanced ticket sales of around 2.4 billion euro fully in line with the seasonal pattern and reflecting solid demand this was partly offset by higher trade receivables driven by passenger ticket sales and continued growth in external MRO business. Turning now to investing activities, we continue to invest into fleet renewal, including final payments for eight aircraft, advanced payments for future deliveries, and capitalized engine overhauls. The outflows for these investments were partly offset by aircraft disposals and sale and lease back transactions, including the sale of the Boeing 7478. Overall, net capex remained well on track with our plan. As a result, adjusted free cash flow reached 1.38 billion euro, clearly above the prior year level. Let me move to balance sheet. We continue to operate with a strong and resilient balance sheet. The strong cash generation, which I described before, further supported this balance sheet strength. We used the cash to repay a 1 billion euro euro bond and a 500 million euro hybrid. Liquidity stood at around 10.3 billion euro at the end of March, comfortably above our target corridor of 8 to 10 billion euro, even after debt repayments and ongoing fleet investments. net financial debt declined further as a result our leverage ratio improved to 1.6 times and our investment grade ratings remain unchanged with a stable outlook this balance sheet strength gives us sufficient headroom to navigate volatility like the current situation while continuing to invest into fleet renewal and our strategic priorities let me now come back to fuel as this is clearly one of the most important variables this year since march fuel markets have been shaped by geopolitical developments in the middle east particularly the escalation of the conflict and the closure of the strait of homos what we are seeing is not a classic oil price move while crude prices have increased materially jet fuel prices have risen significantly stronger driven by widening product spreads refining capacity logistics constraints and product availability have become the dominant drivers importantly these developments were not yet fully visible in our first quarter figures particularly since 60 percent of our march fuel consumption was settled at previous month's price levels you will remember that during our full year 25 earnings call we had announced an additional cost burden of and that was estimated at that time of about 20 to 25 percent versus prior guidance for the two months march and april combined and now with hindsight having these two months behind us i can confirm that we landed within that range respectively rather towards the lower end of it in fact for the first quarter in total and that's now going back to q1 again fuel was still a tailwind as higher prices only started to flow into our cost base from april onwards and the earnings impact is therefore clearly back loaded into the last nine months of the year particularly into q2 based on prices as of last week Thursday our fuel bill for 2026 is currently estimated to be around 8.9 billion euro of this amount approximately 8.7 billion euro relates to fossil fuel and around 0.2 billion euro to mandatory stuff compared to our previous guidance this represents an increase of around 1.7 billion euro driven almost entirely by the price escalation since the start of the war in Iran, and this clearly makes fuel the single most relevant cost headwind for the remainder of the year. From a mitigation perspective, we entered this phase well prepared. We are currently around 83% hedged at our passenger airlines for the remainder of the year 2026, which provides meaningful protection against short-term volatility while still allowing us to benefit also if prices normalize for 2027 we are hedged at around 36 percent and in relative sense in a relative sense this gives us a significantly more significantly more stability than less than less hedged peers in the current environment that said fuel markets remain exceptionally volatile and given the high uncertainty as well as the elevated price levels for the upcoming months we have temporarily suspended our regular hedging activities since the beginning of March and given the exceptional volatility and uncertainty we have adjusted our hedging approach in recent weeks to seize opportunities created by these market conditions. Alongside our existing hedge portfolio we have selectively added short-term instruments to protect against jet fuel price escalation and spread risk when prices were favourable. this helps us to capture market dislocations while retaining flexibility however it is important to be transparent our expected fuel costs are based on the forward curve because that forward curve is still in backwardation and this is obviously the best estimate that everyone or the best view that everyone can use fuel cost will hence depend on whether this forward curve materializes apart from fuel pricing let me also comment a few sentences on fuel availability currently we don't have any shortages in the physical supply and up until june we are convinced that our fuel supply will be fully secured particularly in our own hubs nevertheless we are currently making also plans for a scenario if this should if this should change measures again are various and they can include also tank stops or or other aspects but we'll come to that later on this clearly shows that the entire topic of fuel is not an isolated issue it must be viewed together with network adjustments cost discipline and also revenue recapture let me now move on to put the current demand environment into perspective and how it helps to offset fuel headwinds let me highlight four key aspects or four data points first march was an inflection point can we move on with the slide you are perfect brilliant so first march was an inflection point yes this month's march it benefited from one of effects and we captured those opportunities successfully as demonstrated by unit revenues up 12 percent versus prior year more importantly when we normalize for direct crisis effects so positive effects from the crisis the year-over-year easter timing shift that we need to normalize and fx impact we see an increase of around five percent we read this as a clear proof point for an intact demand environment and also for our ability to translate it into value through revenue management second april was a special month for us six strike days weighed on demand at lufthansa and as a result rask for new bookings for departures in april was let me say in inverted commas only about 12 percentage points above pre-crisis levels and if i exclude if we exclude lufthansa airlines from this perimeter the rask increase for all other airlines was 14 percentage points above pre-crisis levels two things matter here the demand signal remained positive despite the disruption and the breadth of our group network together with our multi-AOC approach helped buffering or cushioning the impact from the strike. At the same time let me be very clear additional strikes do harm or can harm demand further and repeated disruption can certainly intensify that effect. Let me come to the third point. The key question is how sustainable is this demand strength and let me share our current view based on what we see in our booking data and as you can imagine we follow here a kind of facts and figures facts and figured figures based approach and looking at the near term for the second quarter as a whole we currently see unit revenues around eight percentage points higher compared to end of february that suggests that the demand upside at higher yields is not a short-lived spike it appears to last showing longevity let me now come to my last the fourth point beyond q2 we remain appropriately cautious we certainly cannot predict how things will play out eventually particularly not how quickly golf carrier capacity returns into the market and how rapidly customers regain confidence in using those hubs but what we can say is this for the remainder of the year we have already locked in long-haul bookings at favorable pricing levels with yields around 34 percentage points above pre-crisis levels even as booking cycles shorten which is normal in times of volatility we are already seeing persistently strong demand in our intercontinental booking curve well into year end this is exactly why a yield focused revenue steering approach is the right thing to do for the time being and going forward we will not solely rely on demand strengths but also continue to optimize our network on the network side we are actively reducing capacity on structurally weakest routes particularly where profitability does not compensate current fuel price levels as in the case of city line at the same time largely as a result of the city line measure we are migrating capacity to more efficient AOCs which structurally improves our cost base over time. Furthermore and also as mentioned a few times it is an important step in our strategy execution to simplify and harmonize our fleet and we will make further progress on that through these measures as well. On the cost side we complement this with targeted safeguarding measures. This includes a reduction of project spending or temporary external hiring stop except for operational roles and this is fully aligned with the Lufthansa Airlines turnaround logic and all of these measures we are implementing simultaneously. With that we are not waiting for the uncertainty to resolve it you can clearly see we are actively managing it while the demand environment remains constructive. Let me now move on to guidance. We guided for adjusted EBIT significantly above prior year and the underlying reasons for that guidance are still intact. Fleet modernization continues, the revenue environment benefits from commercial initiatives including ancillaries focus, Lufthansa Airlines turnaround measures are contributing and Lufthansa Technik's earnings trajectory is structurally higher. The first quarter is a proof point that these fundamentals in place. However it is equally important to put this into perspective. In our wording significantly above prior year means more than 10 percent growth and when we issued the guidance at the beginning of this year or when we last time spoke on our earnings call we of course had some headroom beyond that threshold given the fuel price development and the strikes that we've seen so far that headroom is now largely gone so what do you need to believe for us to maintain this guidance the core assumption is that additional revenues in the network airlines can offset the additional fuel cost and on fuel we currently see roughly 1.7 billion euro cost we roughly see 1.7 billion euro more cost than initially expected based on the current forward curve on the revenue side the key drivers are the strong demand situation on asia and africa routes higher than expected yields and load factors and the assumption that the yield uplift persists through the year as our yield focus steering continues to work and as i've shown you the booking intakes we are currently we currently see support this ceases however it is equally clear that time will tell to what extent and for how long the demand quality will persist and when speaking of timing let me also say timing matters apart from a volatile environment that we have to deal with all of us generally we do not expect the quarterly evolution to be linear the recapture of fuel cost is expected to be around 60 percent in q2 and therewith will weigh on the second quarter more and the recapture rate for the following quarters q3 and q4 we expect to be well above 100 percent if demand remains on the elevated level that we currently see in our data. In other words, as the fuel headwind is front-loaded in the second quarter, the projected recapture rate strengthens sequentially throughout the year. Additionally, we see different parts of the group being impacted differently by the crisis. On the one hand, the point-to-point business is facing negative net effects, while generally leisure demand remains supportive in parts of the network some markets including turkey via sun express are affected and the segment has less ability to offset higher fuel costs through intercontinental yield dynamics on the other hand what adds confidence is that other parts of the portfolio provide counterbalancing effects lufthansa cargo benefits from strong demand in volumes and freight rates. Post-crisis freight rates are up around 31% worldwide and around 90% on routes to Southeast Asia, which helps offset pressure elsewhere. MRO remains broadly unchanged in its outlook and is comparatively less affected by the Middle East situation. Despite the Middle East crisis and while being fully aware of the high level of complexity and uncertainty that comes with it we follow the data that we currently see and there with maintain our financial guidance for 2026 adjusted EBIT significantly above 2025 adjusted free cash flow around 0.9 billion euro and net capex around 2.9 billion euro and of course we continue to follow a disciplined capacity growth with a continued focus on intercontinental markets So to summarise, headroom has tightened materially, but demand resilience, yield-focused steering, targeted hatching improvements and accelerated network and cost measures drive our confidence that the fuel headwind can be absorbed over the course of the year. And with that, Carsten and I are happy to take your questions.
Operator
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star one and one again. Please be reminded we ask for a limit of two questions per caller. Thank you. We'll now take our first question. And this is from James Hollands, BNP Paribas. Please go ahead.
Thanks very much. Very interesting, Till, on a lot of that. Maybe, Till, I could just follow up on your turnaround program. I didn't hear much mention of the 1.5 billion gross cost benefit in full year 26. Maybe just, is that still the right number? Are you pushing a lot harder on this? and I think secondly, second question probably relates to that perhaps you could quantify I think you've implicitly implied strike costs in Q1 at 40 million, what have you seen for the six days in Q2 and I think a broader question maybe for Carsten is any sign of a resolution across the divisions, thank you Thanks James for the two questions, first on turnaround look we've had so many topics to cover today so i saved that for the q a we are fully on track with the turnaround and the activities that are happening there once again as a reminder
kind of the three big big blocks that you always need to keep in mind is fleet renewal and the q1 was i think proof point that we are fully on track with the fleet with the aircraft we have received and again in total for the full year we expect to receive about 45 new aircraft step one step two we continue to accelerate shifting into our lower cost higher profitability aocs and you can see that what we have announced around city line is is a step in that and the third big bucket is indeed the 700 initiatives that we are following through so the 1.5 billion of gross contribution stands and let me add and you're quite right are we pushing now harder of course we do some additional EBIT safeguarding which which I mentioned this is a bit of shorter term nature I would say you can imagine everyone approaches discretionary spending with a sharp pencil at the moment there was of course we keep pressing and pushing towards probably rather a bit more than less so that's the answer to your first question second on quantifying strike cost q140 absolutely and the second quarter the six days are roughly roughly
150 million negative so you can say rounded roughly 200 million so far negative weighing on us and james carsten just to add because these numbers per day are significantly smaller than what we used to have per strike day maybe two backgrounds on that first of all the participation rate is lower we have a lot more volunteers than in the past and secondly with the multi-hub approach we're able to offer between 75 and 80 percent of the program for our passengers and reroute them via other hubs so that's why these numbers fortunately are smaller than what we had seen in the years before thanks I know what to use your own words never waste a crisis just to follow up do you think this crisis will potentially lead to a resolution sooner on later well I think the discussions negotiations also individual conversations with crews over the last weeks have shown that the only way we get a resolution is to offer perspectives to our labor groups across the airlines again. And I think also Julian has understood that to achieve those perspectives for everybody, costs have to come down. So in that regard, I think in the days of less growth, in days of also being able now to grow our new AOCs as mentioned by Till, this resolution eventually will come about. The other alternative to continuously shrink shorthall in the main line and one day have a long-range airline only, I think, is a strategic option. We also have prepared, but I don't see as the most likely outcome.
Operator
Thank you. We'll now take the next question. This is from Stephen Furlong from Davie. Please go ahead.
Yeah, good morning, gentlemen. I was wondering, Kirsten, do you see any movement in general from your discussions with the EU? Obviously, once everything has happened and the risk with access. I know you talked about some initiatives there, but, for example, things like SAF and issues of ESAF and availability and stuff. So I'm just wondering whether the competitive disadvantage that European airlines are suffering, Are you seeing any kind of, I guess, realisation that Europe wants to have global leaders in aviation like other sectors? And then just maybe, Till, just on the booking curve, here for some kind of LCC airlines or leisure airlines, the booking curve is very short.
People are concerned about cancellations and things like that. sounds to be like maybe a little but more like long haul is very strong and short haul is just more question mark at the moment thank you yes steven this dialogue on this topic between you and me could fill the whole q a but of course i need to be short and i summarize it in a way the higher up the ladder we engage with the eu commission the more understanding there is and i would say this includes our national governments in all our home countries italy germany austria switzerland belgium but when you work your way down on the working level where actually regulatory policies are made and put into writing it's way too slow so with all these years of experience i still would give it a positive twist because we have not seen even on the top neither in berlin nor in russell's over the last years any indication that they understand the issue you rightly raised how can there be global champions out of europe if we disadvantage them disadvantage them that we have been missing for years it's now there how we turn this into new regulatory policies i think we'll take a few more quarterly presentations and discussions with you and mainly with them of course yeah steven to your second question uh can confirm our booking window or booking cycles have shortened but equally in april we've seen that the load factor
gaps that we were still seeing basically have closed when when arriving closer to the to the departure date and you are quite right i think it is more towards the cont side intercont is showing there more resiliency in terms of the booking window compression and I think we can also see that in particular in the outer months we can see actually quite comparable quite comparable seed load factors in the intercons than we had a year ago Great, thank you
Operator
Thank you. And the next question is from Alex Irving, Bernstein Please go ahead Hi, good afternoon.
Thanks for taking my questions. First one, how confident are you really that Q3 and Q4 yields will be able to more than offset the increase in fuel bills with only minimal capacity reductions? How much visibility do you have and what do you need to believe around the return of Gulf connecting traffic and passengers' willingness to use it for that increase in fuel bills to be more than offset? Second question, how do you think about winter capacity? Do you have less hedges as the year goes on? I think you've announced some short and medium haul reductions, but left long haul untouched. Why would it be the wrong decision to reduce this, against macro risk, and accelerate fleet simplification into the winter?
Let me start off on the first one, just in terms of Q3 and Q4. As I said before, all we can do is we follow a facts and figures based approach. and basically start from what we've seen in our numbers both in March and also now in the second quarter and what we see actually also in terms of yield evolution and particularly in the intercon side on the year to go. What needs to happen, and this is why I said it also, what you need to believe is that the current booking trends, which again is a yield-based steering will see the bookings then coming in and let me add as well just to put it a bit into perspective there is obviously a lot of dynamic taking place right now in the market around obviously fuel recapturing and also prices which of course are eventually done at market level But as everyone has started to shrink or take back certain capacity in the market, you've got an environment which currently is conducive to see higher prices being realized. In terms of recapture, of course, as you go into Q3 and Q4, we are seeing a lesser booking stock, which is totally normal. and a year ago we would have seen the same because the seat load factor as you move further out is just lower and therewith you also benefit from the opportunity to have more of those bookings compared to let me say Q2 coming in at yields which are elevated and that is the element which offsets the fuel bill assumption and therewith Let me also say what we said to you here, above 100%. That is, of course, a topic. This should be clearly above 100% in order to have the offset created. Sorry, short-term, the next question was just capacity. Here we continue our strategy, as we have basically talked at the beginning of the year. CONT consolidation we continue and you can see that literally in everything that we've done in the first quarter and also in April and on inter-CONT we continue to grow all in all I do expect and this is why we guided also to a slightly lower overall ASK growth instead of the close to 4%. We are now guiding more towards 0% to 2% with inter-cont positive and cont slightly shrinking.
Operator
Thank you. We'll now take the next question. This is from Rari Cullinane from RBC Capital Markets. Please go ahead.
Yes, good morning. First question is on your hedge ratio in 2027 have you actually continued uh hedging crack spreads into 2027 could you um yeah provide some detail on to what degree you're hedged on on brent castle and potentially kerosene um and then secondly just to clarify on the recapture rate should we consider that uh just a function of the ebit change relative to the fuel cost change is that how we should think about that thank you sorry let me start off with the with the first one um look what i said is
that we um when uh early in the early in the crisis um when there were prices on jet crack still low we opportunistically um added this to increase our protection level at a product level um for 2027 um as i said we are at about 40 percent or let me say precise 60 36 percent in terms of overall hedge ratio uh here uh we we uh we had and that was all done pre-crisis level please remember uh this is where we had a combination of uh brand and gas oil based um hedges uh placed your second question was the recapture rate or the recapture concept in essence it comes down to what we see on the fuel bill um and basically then you can put it just back to rask which eventually yield times what we see as as available seat kilometers being taken up, and that's eventually those two elements. Of course, what I said, EBIT safeguarding measures kind of, they complement the picture, but the big levers are those two, fuel versus RASC.
Operator
Thank you. And I'll take the next question. This is from Jared Castle, UBS. Please go ahead.
Good morning, everyone. Maybe can you give a bit of an update in terms of M&A, re-tap, and also the ITER stake, if you're going to be increasing it come the end of June? And then secondly, North America, you know, you were lagging a bit on yields in 1Q. I don't know if this is currency, but what are you seeing now in terms of point of sale from the U.S. versus point of sale from Europe?
On M&A, Jared, not much new to report today. You rightly quoted on ETA, the window to agree on a potential additional share to be invested in is June, and then again June next year, not today. And then on TAP, I think it's all been said, as you do know, the two, or the one competitor and us being in the race have announced their interest. We share our view that it's not only about TAP, but it's about Portugal and Lufthansa Group. There is an aviation strategy behind it. We are about in a few weeks' time to open our new facility in Porto on Fluxa da Technique. We're looking at an additional location for a flight school in Europe, together with the military, which could well be Portugal. and obviously we would perfectly fit TAP into the picture by then catching up market share to Latin America to the other two large or at least to the second large competitor currently already positioned in that market.
So that has not been changed and as Till said before, strategic decisions, investments, M&A in our company are not withheld by operational or short-term challenges. yeah north atlantic um so point of sale us uh continues to be pretty strong um that's that's more than more clearly more than half of our booking 60 to 65 percent and you're quite right what you're pointing out um we had obviously a little bit of fx headwind um also due to that fx was less favorable um on the revenue side but i would expect that this starts to phase out as we are in moving through Q2 and Q3, Q4, just dollar-based.
Operator
Thank you. Next question is from Harry Gowers from JP Morgan. Please go ahead.
Yeah, morning, everyone. First question from me. On slide 16, you showed those numbers around kind of the bookings level and RASC versus pre-conflict. I was wondering if you could provide your April network year-over-year RASC number, so on the same basis as the March plus 12 number that you gave, and then just any colour you could give around transatlantic and Asia pricing in April specifically. And then second question, your Q1 network ex-fuel costs came in a bit higher than the rate of inflation, so will that just be a one-off given the lack of capacity growth, and could that reverse into the coming quarters? Thanks a lot.
Okay, Harry, so just on April, I mean, obviously, we are not moving into a monthly disclosure on our call. You have to bear with me that for March, we did it because that was a bit of an inflection point that was created due to the crisis. For the current quarter, I'll stick to relative pointers to give you an idea of what we see. and again what matters here really is and this is where the whole logic goes you have a certain booking stock which is pre-crisis levels which obviously kind of followed the normal pattern let me let me put it like that this is why i try to give you a normalized april normalized march figure solid let me say exit point with five percent rask increase normalized into april but then i have to leave it with the relative with a relative perspective and this is why i stick to the 12 percent higher 12 percentage points higher rask for the post crisis bookings and let me add also april was a specific month for us because of the six strike days and sometimes you also don't fully capture kind of the negativity in that because there are always certain carryover effects that you've got also in your in your booking behavior and this is why i tried to give you an x lufthansa airlines perimeter where it was 14 percentage points higher post crisis post crisis bookings versus pre-crisis your second question ex-fuel costs were higher than inflation so no on cost as such in the first quarter we are on track you always have got in these comparisons a little bit of year over year dynamics let me say at the cask level of course the The ASK growth plays a bit into it. We had a bit of, and there was less fixed cost digression. But overall, if I draw a line under the cost review for the first quarter, this is all in line with what I had expected.
Thank you, Till. Maybe just a very quick follow-up. On the April kind of six days of strike activity, Did you see any evidence that you started to see any future bookings impact or kind of nervousness for people around traveling just due to the very high number of strike days?
Well, I mean, look, it's not ideal. Nobody wants that and nobody is happy also with the sentiment effects of it. But normally these things do come back relatively quickly. And let me just add one point that Karsten has already highlighted. We have managed very well to use our other sister or subsidiary airlines and our hub system to capture and serve for the good of our passengers and guests, most of them or a lot of them. That's not ideal and nobody is happy from an experience point of view, but of course we were able to help most of them getting through that.
Operator
Thank you. We'll now take the next question. This is from Muneeba Kayani from Bank of America. Please go ahead.
Good morning. Thanks for taking my questions. Till, I just wanted to follow up a bit on how to understand your guide for this year. So the 2Q fuel recapture of 60 percent, you've said the fuel bill will increase by one point, based on the forward curve, $1.7 billion for the year. Is it right to think that most of that increase, say, a billion is coming in 2Q? And so if you get a 60% recapture, then that's something like a 400 million headwind on Q2 EBIT, and then that with more than 100% recapture gets positive in the second half. So that's my first question. And then secondly, just wanted to follow up on your comments around jet fuel supply risks. So, is that mostly a comment on Asia and Africa post-June? Kind of what are you seeing right now in Asia and Africa? And how much of a concern would jet fuel availability in Europe be post-June at your hubs? Thank you.
Let me start. Hi, Moniba. Let me start off with the second question first. i mean obviously we we go also here with what our suppliers tell us in terms of visibility but also was what the authorities in the end tell us for the european situation overall i think it's fair to say that nobody has got complete crystal ball of how things were going to play out but what you can probably see is that the market is finding a bit its way at the product level and this is why you also see that actually jet crack has come down again vis-a-vis gas oil or crack there which is basically a bit of an indication and we have seen first imports obviously from the US coming in we've seen imports from Africa coming in on jet fuel and of course these are elements that keep kind of let me say speak to the or depict the fluidity and dynamic within the markets eventually but let me also say it's fair nobody knows exactly how things were going to play out and of course there was one of our core assumptions for the guide or the guidance that i also said is that we will basically continue to have jet fuel available if that would materially change then of course things many things do change but that's not what we see at the moment let me go to your first question so just the guide the guidance q2 recapture rate so yeah so fuel fuel bill up 1.7 billion in total just as a reminder within that there's also cargo roughly roughly 10 percent you can say is is cargo cargo we follow a different principle where we usually pass on the price increases directly so that takes you roughly to about 1.5 billion and now when you think of it very true 50 very true so the second quarter will take a very high share i would say probably about 50 of that roughly roughly you can see in the second quarter and this will weigh on the recapture rate because the booking stock that we brought into the second quarter of course carries also a sizable portion of pre-iran war bookings at a lower price level and then basically as i said sequentially you move through and you've got the forward curve on the one hand side for fuel and you've got the yield seed load factor translating into RASC in Q3 and Q4 into a recapture rate above 100%.
Thank you. That breakdown is helpful. So, kind of half of the 1.5 billion in 2Q, and then we assume the 60%, so the remaining would be an EBIT impact, at least for passenger airlines. And then cargo and all would have a benefit.
Moniba, let me just clarify, if I wasn't precise enough. So, in Q2, almost 50% of the fuel increase, that should come in the second quarter. So the largest part of fuel increase is in the second quarter, almost 50% I would expect. Okay?
Operator
Thank you. We'll now take our next question. This is from Andrew Lobenberg from Barclays. Please go ahead.
Hi, Gavson. Hi, Kel. Can I come back to these numbers where you're showing the post-crisis booking revenues compared to the pre-crisis, you're showing it's 14% for April. I think if I'm not misinterpreting, you're showing it as an 8% improvement for Q2. On a normal booking curve, over time, the unit revenues that come in go up. And when you're, you know, on the month coming into the quarter, that booking curve is going to be moving up quite a lot. Therefore, when you're giving us these numbers of 12% for April, or 14, excluding Mainline, 8% for Q2, I mean, in a normal year, or does this industry ever have one, but, you know, in a normal circumstance, how much would that booking curve move up? So, you know, just fun to put that in. My second question would come around to premium. So when we look at your premium unit revenues on long haul, they are in Q1 better than economy, but not by much. When we hear the American carriers talk, indeed when we hear Ben Air France talk, premium is wonderful. It is a halcyon of joy and huge prices, and your gap is quite small. And you also told us that the March premium unit revenues were pretty damn good, suggesting that January and Feb premium revenues were falling. So can you perhaps help me understand why your premium performance looks more calm than your other peers who are talking in the industry?
Hi Andrew, let me take the first question. So I can only revert back to what I said but let me try to rephrase a bit. I can explain what we see for the second quarter and it is in essence a snapshot on booking inventory today versus end of February which was basically pre-crisis and that as the eight percentage points higher for the entire inventory of the second quarter it is true that we do see a change in booking behavior which is more short term which i also commented on even more so in the cont area versus intercont but we have seen and this is the element which i think i also commented on seat load factor closing nicely in april which kind of then gives you the result of well which i i withheld to to tell you the april the april rask but which gives you eventually the figure and this is what we see and at the same time this is what we have to live with because the circumstances or the more volatile environment of course makes people also book more short term premium so premium revenue on intercont so clearly we see I mean here you need to step back and basically see a bit more of the strategic view because we are getting in we are transforming the experience with more and more long haul aircraft coming in with the Allegra's cabin or Swiss sensors in all fairness that now started let me say only or started more in Q1 also driven by the certification of the remaining business class seats where the bulk of it got obviously certified and now available for sale. And there was, I would say, on the yield uptick in the premium classes, I expect that there's a lot more to come in the weeks and months, quarters and years as we continue to roll out our Lagos and Swiss sensors.
Operator
Thank you. And our last question today is from Mark Zek from Kepler-Schövre. Please go ahead.
Thank you for taking my question. Actually, just two clarification questions. With the more than 100% recapture rate in H2, what does it basically mean that you expect with the forward curve indicating a few prices to come down somewhat? did you kind of keep ticket prices then stable from here on or let's say from May on and therefore you will have a higher than 100% recapture rate, indicating that you probably won't give back lower fuel prices to passengers for now. And I guess we heard from some of your U.S. competitors that were saying that airlines were kind of underpricing generally. So if we look into 2027, assuming at one point we'll have normal fuel prices again, would you attempt to kind of keep current fixed price levels or would you at one point fully give back any decline in fuel prices to the end consumer? And then I guess second question on the adjusted EBIT guidance, I guess that the EBIT guidance significantly above 2025, 10% includes strike costs. You said there was probably 200 million or so in strike costs, so that's about 10% or so of 2025 EBIT. If I look at consensus pre-crisis, and we were looking for 15% to 20% up, does it mean basically you now see the same average level X strikes that you saw pre-crisis and that you're still looking for 10% up minus those 10% from the strike level, matching those 15% to 20% that were expected initially? Is that the right way to look at it? or am I missing here something?
Yeah, hi, Mark. Two important and great questions. Let me start with the second one first. Just to remind you again, when we moved into our outlook at the beginning of the year, you can imagine, and it gives you also a bit of a perspective on how we think about outlook, we came in with Headroom. We picked the significantly above to give you a good guide of how you can think about everything. and we had headroom with everything that has happened now around us including also the 200 million roughly 200 million of strikers so far the headroom has largely gone and this gives you an idea where we where we stand roughly roughly and and that is how to think about kind of the strike positioning as such underneath you've got obviously big moving items with fuel to start off with the whole revenue steering and yield evolution on the other end side so these are the two big factors i've i think explained extensively furthermore at p2p segment so euro wings you you saw also that we take a slight step back in terms of what we expect from them in the year but of course we see cargo performing stronger and that goes also into the year to go with mro largely being unaffected and that gives you the big moving parts at the segment level for our guide or the expectation for the rest of the year when you now think about your first question the forward curve of course i mean there's nothing there's nothing more intelligent than the forward curve in the market to determine what price levels for fuel should be that forward curve is in backboardation that is a core assumption and when you now think of relative to others indeed we benefit from being hedged but let me say also to your question how do you think about pricing prices are done at market level eventually of course we've got we've got a view on this and we've got a dedicated yield-based strategy that we pursue with the goal to make sure that we achieve an offsetting of the fuel bill over time and and i think that is shared but also what our US peers are highlighting and they have got, and it's not a secret, they've got a higher fuel bill to stem and that creates overall in the market while everyone is also reducing capacity a bit, it creates an environment which I believe is also allowing these yields to realize.
But time will tell. but maybe mark just one quick addition to your view of the industry or your question towards the view remember we have been saying for some time and I now talk also for my counterpart in United because obviously we legally allowed to talk on capacity and price we have been saying for some time with demand being somewhat limited for pretty years to come sorry the supply being limited for probably years to come due to the ongoing issues with the engine manufacturers air framers and let's be honest more even with the supply chain below and the one hand a healthy demand around the world we should see good years ahead and now it's proven that if you brace prices customers go along so i think that's a proof of our idea that this indeed industry probably has been underpricing its products in the end the market sets prices as Till said, but there is room to get more for the limited amount of supply we can due to lack of equipment offer. So I think one day maybe we might look back at this time after the Iran war as a turning point where the industry was starting to show what its products are really worth and maybe also consolidation on top, the healthy ones beginning stronger and larger, obvious in the US, a little less obvious in Europe but I'm sure similar trends one day might be looked at as an important part of the industry's recovery to higher profits.
Thank you. Proper closing remarks, I guess. I look forward to that. Thank you.
Operator
Thank you. And there are no further questions, so I will now hand back to Mark Nettersheim for closing remarks.
Yeah, thanks to all of you for the good discussion, for the lovely interaction and questions. We from Investor Relations look forward to staying in touch with you and talk to you on the latest conference or next quarter.
Operator
Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.
