Germany's Lufthansa said today it expected demand for short-haul flights in Europe to drive growth at its passenger airlines this year, forecasting a return to group operating profit for the full year.

Travellers have returned to the skies following Covid-19 pandemic-related travel restrictions in 2020 and 2021.

This has helped airlines like Lufthansa, Air France-KLM and Aer Lingus and British Airways-owner IAG to return to profit this summer.

Lufthansa said bookings for August to December were currently at an average of 83% of the pre-crisis level.

The airline industry, particularly in Europe, has struggled to cope with the rapid rebound in demand, with huge queues building at many airports because of staff shortages, prompting last-minute cancellations and frustration by holidaymakers.

The travel chaos has led airlines to cut back capacity, with Lufthansa cancelling more than 2,000 flights this summer.

It said it expected to offer about 80% of pre-crisis capacity in the third quarter, less than previously planned.

That should, however, help it record a significant increase in quarterly adjusted earnings before interest and tax (EBIT) compared with the second quarter, it said.

Lufthansa posted adjusted EBIT of €393m for the three months to June thanks to booming demand for air cargo flights, up from a year-earlier loss of €827m.

Its passenger airline business reported an adjusted loss before interest and tax of €86m for the second quarter, hit by costs related to flight disruptions.

Lufthansa may face further disruption from industrial action by its workers, with a walkout by ground staff forcing it last week to cancel more than 1,000 flights.

Talks with labour union Verdi, which demands 9.5% more pay for ground staff, are continuing today.

Lufthansa's pilots last weekend also voted in favour of walking out, though no strike has been announced so far.

Lufthansa forecast a full-year adjusted group EBIT of more than €500m, up from a year-earlier loss of €2.3 billion. Analysts on average expect €569m, according to a consensus published on Lufthansa's website.