Lufthansa Braces for $2 Billion Fuel Hit as Middle East Crisis Disrupts Supply

Lufthansa is staring down an extra 1.7 billion euros (roughly $2 billion) in fuel costs next year, driven by the ongoing turmoil in the Middle East. Germany’s biggest airline disclosed the figure in its first-quarter earnings report on Wednesday, warning that the situation presents “enormous challenges” for the entire industry.

The carrier has already hedged 80% of its jet fuel needs, but it still expects the additional expense to land in 2026. To cover the gap, Lufthansa plans to cut costs elsewhere and raise more money from ticket sales.

Despite the headwinds, the airline posted a first-quarter adjusted operating profit of 612 million euros, up from last year. Revenue climbed 8% to 8.7 billion euros ($10.2 billion). CEO Carsten Spohr said the results were a clear improvement over the previous year, but noted that the Middle East conflict, combined with rising fuel prices and operational limits, is putting pressure on global aviation.

The crunch comes as Europe faces a potential jet fuel shortage. The Strait of Hormuz remains blocked, and the International Energy Agency’s Fatih Birol warned last month that the continent could run out of supply within weeks. Jet fuel prices surged 103% between February and March alone, according to the International Air Transport Association.

Lufthansa has already axed 20,000 short-haul flights to save 40,000 metric tons of fuel and eliminate routes that don’t pay. Other European airlines are feeling the heat too. EasyJet reported an extra £25 million ($34 million) in fuel costs for March and a headline loss of up to £560 million for the six months ending March 31. The budget carrier has hedged 70% of its summer fuel, leaving the rest exposed to price swings.

With peak travel season approaching, demand for jet fuel is expected to be 40% higher than in March. Middle East refineries supply about 75% of Europe’s jet fuel. Birol warned that if Europe can’t secure additional imports from the U.S. and Nigeria, the continent will be in serious trouble.