Lufthansa said its net loss widened nine-fold to €342m in the first three months of the year, hurt by rising fuel costs and excess capacity in Europe.
"We are confident we will see a recovery in our unit revenue as early as the second quarter. Our confidence is based above all on our favourable booking levels for the month ahead," its chief financial officer Ulrik Svensson said.
European airlines are battling overcapacity and high fuel costs, while uncertainty around Brexit has led some travellers to delay booking flights for their summer holidays.
Lufthansa expects the market to grow by 4% in summer, compared with a rise of 9% seen in winter, while it expects its home market - defined as Germany, Austria, Switzerland and Belgium - to grow by 3%.
It also now expects capacity at Eurowings to be flat, compared with previous forecast of 2% growth. The carrier is planning to offer 1.9% more flights globally.
For 2019, the group still expects to make an adjusted operating profit margin of 6.5-8%.
Fuel costs are projected to be €700m above the previous year, and €50m more than its previous guidance.
Adjusted earnings in its Other Businesses and Group Functions segment is expected to be €100m below the previous year, compared with a miss by €150m projected earlier.
The first quarter is traditionally the weakest for airlines.
Earlier this month, Lufthansa had said a €200m rise in fuel costs weighed on earnings, while ticket prices took a major dive.
Quarterly return on available seat kilometres was down 8.5% at its low-cost carrier Eurowings and 5.2% in its other airlines, while costs were reduced 7.2% and 0.8%, respectively.
The sector has seen a number of recent failures, such as that of Iceland's WOW, Britain's Flybmi, German holiday airline Germania and Nordic budget airline Primera Air.