German airline Lufthansa expects the lower price of oil to cut its fuel bill for 2015 by 13% after the cost of hedging, setting it on course for a rise in profit this year.
Lufthansa said it estimated a 2015 fuel bill of €5.8 billion compares to €6.7 billion in 2014. Its new assumptions for 2015 included a price for Brent crude of $68 a barrel.
Brent crude is at its lowest level since April 2009 and was down 98 cents at $49.13 this morning.
The oil price slump has boosted European airline stocks, with Lufthansa climbing 30% in the last three months, while British Airways owner IAG has gained 43% and Air France-KLM is up 25%.
While the lower fuel price would be one of its main profit drivers in 2015, Lufthansa said that it could create uncertain pricing and affect capacity.
Previously airlines have used sharp falls in the price of oil to offer more flights, putting pressure on prices.
Lufthansa faces competition on European routes from low-cost carriers Ryanair, EasyJet and Vueling and predicts its yield, a measure of pricing per passenger, will fall further in 2015.
The German airline is currently 73% hedged for 2015, up from 79% in 2014, the airline said. Lufthansa each month hedges up to 5% of its exposure for the next 24 months, meaning that at any time up to 85% of its needs are covered.
It also confirmed it expects 2014 operating profit of around €1 billion and said 2015 earnings were expected to be significantly above that.
Lufthansa added its new low-cost long-haul business, based in Cologne and flying under the Eurowings brand, will be launched on October 15.
