Headquartered in Cologne, Germany, Deutsche Lufthansa AG (commonly referred to as just Lufthansa) is an aviation group with operations worldwide. Lufthansa is the largest airline in Germany and Europe and one of the biggest in the world as of April 2022. Lufthansa is a founding member of Star Alliance, the largest global alliance by passenger count. The company was founded in 1926 and currently serves its customer through three core business segments: Network Airlines, Eurowings, and Aviation Services.
Lufthansa is now a mature and well-established company, but its beginnings were anything but stable. After World War I, the company was founded when several German aviation companies merged to form a national carrier. Lufthansa was initially based in Berlin, and it operated until 1945, when all its services were halted following the defeat of Nazi Germany after World War II. The company launched again in 1953 in its current headquarters, and it has grown to achieve many feats in the tricky airline industry. As a highlight, Lufthansa was the first airline to train women pilots; they were the launch customer of the best-selling Boeing 737 series and the first airline to offer inflight internet. It is also considered the national pride of Germany and was responsible for flying home the country’s football players that won the World Cup in 2014. Lufthansa has, over the years, pursued both organic and inorganic growth. The company currently has over 300 subsidiaries and affiliated companies, and some of its well-known brands include Austrian Airlines, SWISS, Germanwings, SunExpress, and Brussels Airlines.
Lufthansa debuted on the stock exchange in 1966. It is listed on the Frankfurt Stock Exchange under the ticker symbol LHA, categorized in the Industrials sector, under the Airlines industry. LHA is an MDAX component and is available for trading on the electronic platform XETRA.
LHA Stock History
Lufthansa has not implemented any stock splits in its recent history. Its stock price has been very volatile, reflecting the airline industry’s turbulence in recent decades.
The stock price of Lufthansa traded at around €20 at the turn of the millennium. The stock gradually climbed towards €27 but quickly tumbled to circa €8 by late 2001. It attempted a brief recovery, but by early 2003 it fell again to below €10. After a turbulent early 2000s, the Lufthansa share price got a reprieve and steadily edged above €22 by early 2007. However, the 2007/8 Great Recession pressures triggered a tumble of Lufthansa shares to around €7 by early 2009. The stock would only pick upward momentum in 2016 when it sustained a rally that saw it print its all-time high above €30 in late 2017. The subsequent market correction was overextended by the 2020 Great Lockdown that triggered a sharp tumble to below €8 by May 2020. The airline industry was one of the hardest hit during the novel coronavirus pandemic, and Lufthansa continues to feel the impacts to date. LHA currently trades around €7 as of April 2022.
In terms of Lufthansa stock dividends, Lufthansa is a willing dividend payer despite its challenging business environment. In 2019, the company adopted a policy of distributing 20 to 40 per cent of its net income adjusted for one-time gains and losses.
How to Trade Lufthansa Stock
Here are the factors to consider when trading LHA stock:
Legislative and Taxation Issues
Lufthansa operates in one of the most regulated industries. It has to deal with diverse regulatory issues imposed by air traffic in different jurisdictions. It also has to deal with legal issues such as joint ventures and partnerships, aircraft financing and leasing, staff strikes, passenger rights, and third-party claims. There are also different taxation regimes in various jurisdictions that Lufthansa has to navigate.
There is fierce competition in the aviation industry. Lufthansa, in particular, faces stiff competition in Europe from low-cost, no-frills airlines, such as Ryanair and EasyJet, that have a massive local footprint. Internationally, the company has to deal with Middle Eastern airlines, such as Qatar Airways and Emirates, that enjoy state patronage and expand globally aggressively. Frankfurt, Lufthansa’s central hub, is still one of the busiest airports in the world, but the rise of the Middle Eastern carriers has seen Doha and Dubai witness a huge amount of traffic in recent years.
Oil Prices Volatility
Fuel expenses account for the most considerable costs for airline companies such as Lufthansa. Most airline companies hedge on oil to limit the risks of price fluctuations, but higher prices still pile pressure on their bottom lines. The rise of conflicts in oil-producing regions such as Russia and the Middle East has seen prices of the commodity continually increase, and this has weighed heavily on airline stocks such as LHA.
Periodic Earnings Reports
The Lufthansa fiscal year runs from January to December, and the company releases quarterly interim earnings reports and comprehensive annual reports to update investors on their business health and performance. Lufthansa investors watch out for metrics such as passenger load factor, revenues, and future guidance. Strong numbers could inspire higher LHA stock prices, whereas weak figures could trigger lower stock prices.
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** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.