Lufthansa stock price rotates lower after reporting record annual loss

Written by: Michael Harris
March 5, 2021
  • The airline posted a net loss of 1.14 billion euros ($1.37 billion) to miss on the analysts’ estimates
  • Lufthansa also reported a record 6.7 billion euro ($8.10 billion) loss for 2020
  • This week’s high of 12.93 is the highest the stock traded since the pandemic-driven selloff in February 2020

Shares of Deutsche Lufthansa AG (ETR: LHA) are trading over 2% in the red this week after the German airline company reported a smaller-than-expected net loss in the fourth quarter and predicted a smaller operating loss in 2021 than last year.  

Fundamental analysis: Record loss

The airline posted a net loss of 1.14 billion euros ($1.37 billion), compared to analysts’ expectations of 1.24 billion euros for the quarter that ended December. Adjusted earnings before interest and taxes (EBIT) were at negative 1.29 billion euros, beating analysts’ estimates. 

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Lufthansa received a 9 billion euros lifeline from Germany’s government last year and said it expects this year’s capacity on an offer of 40% to 50% compared to 2019 levels as well as an average monthly operating cash drain of roughly 300 million euros in the first quarter of 2021.

The airline also said it may have to permanently ground more jets to compensate for the damage it took during the coronavirus pandemic, after reporting a record 6.7 billion euro ($8.10 billion) loss for 2020.

The company slashed its capacity plans for 2021 as the pandemic persists, though it hopes to see recovery in the summer. 

“We are examining whether all aircraft older than 25 years will remain on the ground permanently,” said Lufthansa’s Chief Executive Carsten Spohr, who promised 2021 will be “a year of redimensioning and modernisation” for the airline.

Technical analysis: Failure at a major resistance line

Shares of Lufthansa initially dropped 2.3% to 12.49 euros following the earnings report release, after the stock has recovered about 15% since the start of 2021. This week’s high of 12.93 is the highest the stock traded since the pandemic-driven selloff in February last year. 

Lufthansa stock weekly chart (TradingView)

Lufthansa stock price has therefore failed to close above the 100-WMA at 12.39 euros a share. This is also where the horizontal resistance line is located, adding to demand. The nearby support is located around the 11.20 mark.

Summary

Germany’s Lufthansa reported a better-than-expected net loss for Q4 2020 and predicted a smaller operating loss this year compared to 2020.