Germany's Lufthansa warns of ticket price hikes amid Iran war energy shock

Lufthansa expects ticket prices to increase by double digits next year. The airline says this is necessary because fuel has become much more expensive. Fuel is one of an airline’s major operating costs, so a sharp increase can squeeze profits unless the carrier cuts costs, absorbs the loss, or raises fares.

Finance chief Till Streichert said Lufthansa needed price hikes “to pass on the increase in kerosene costs.” The group expects its 2026 fuel bill to reach €9.3 billion, two billion euros more than the previous year. Ryanair also announced higher prices and cost-cutting measures shortly beforehand.

The immediate cause is the conflict involving the United States and Israel and Iran, which has nearly closed the Strait of Hormuz. That disruption has kept global energy costs elevated. Streichert warned fuel costs could also rise in 2027, although easing geopolitical tensions could improve the outlook.

The Strait of Hormuz is a narrow sea passage between Iran and Oman, connecting the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. It is a crucial outlet for oil and gas shipments from energy-producing countries around the Persian Gulf. The article describes it as a key oil and gas trade route.

Because the passage is narrow and heavily used, problems there can disrupt the movement of energy cargoes. In the article, the conflict involving the United States and Israel and Iran led to its near-total closure. That sharply increased concern about whether normal supplies could reach international buyers.

The result was higher global energy costs, including airline fuel costs. This matters beyond the region because airlines buy fuel in an international market. Lufthansa therefore expects a much larger 2026 fuel bill and says it will raise ticket prices to help cover the increase.

The near-closure of the Strait of Hormuz restricts a major route for oil and gas shipments. That reduces the amount of energy moving normally through global markets and creates uncertainty about future supply. Buyers may then compete more aggressively for available supplies, pushing energy prices higher.

Airlines are affected because jet fuel is made from oil and is traded within the wider energy market. Lufthansa says the conflict has pushed up airline fuel costs as well as fares. Its expected 2026 fuel bill is €9.3 billion, two billion euros above the previous year. Ryanair also announced price increases and a cost-cutting drive.

The effect can spread worldwide because airlines purchase fuel under international market conditions, not only from nearby producers. Lufthansa has protected much of its exposure through hedging, but it still expects higher costs. It says fuel costs could increase again in 2027 if the geopolitical situation remains difficult.

Lufthansa’s expected 2026 fuel bill is €9.3 billion. The company says this is two billion euros higher than last year’s bill. That increase shows how strongly the conflict and disruption around the Strait of Hormuz have changed the airline’s cost outlook within only a few months.

The figure covers fuel costs for Lufthansa Group, which includes Lufthansa itself and carriers such as Swiss, Austrian Airlines, Brussels Airlines, and Eurowings. Higher fuel prices put pressure on earnings because the group must pay more to operate its flights. The company therefore says fare increases will be needed.

Lufthansa has lowered the top end of its 2026 core-profit forecast from €2.2 billion to €2.0 billion, while keeping the bottom at €1.7 billion. Hedging protects much of its fuel exposure, but the group still expects a substantially larger fuel bill. It also warns that 2027 fuel costs may rise.

Hedging means Lufthansa has arranged financial protection for much of the fuel it expects to use. By hedging more than 80 percent of its 2026 fuel costs, the group has largely locked in prices for that share. This makes its budget more predictable when market prices move sharply.

For example, if fuel prices rise after the Strait of Hormuz disruption, the hedged portion should be less exposed to that increase than fuel bought at current market prices. The remaining portion is still affected by market conditions. Hedging therefore reduces volatility rather than guaranteeing that all fuel will be cheap.

Lufthansa says more than 60 percent of its 2027 fuel costs are already hedged too. That offers some protection, but the company still warned that fuel costs could increase in 2027. Streichert added that the outlook could improve if geopolitical tensions ease, showing that hedging cannot eliminate wider market risks.

Lufthansa’s cargo division benefited because equipment for new data centres was being delivered at high volume. The article links this demand to the rapid construction of facilities built to power the artificial-intelligence revolution. More shipments can increase cargo revenue and profit when customers need fast or substantial deliveries.

The group said cargo core profit tripled during the period. CEO Carsten Spohr specifically pointed to equipment for data centres. German companies that manufacture products such as industrial lasers are also experiencing strong demand. Lufthansa’s cargo operation can transport such equipment to the projects where it is needed.

This growth provided an important bright spot while the group faced higher fuel costs and strikes affecting its flagship airline. The article does not give a forecast for cargo demand, but the continuing construction of AI data centres suggests why the division performed strongly in the reported quarter. Overall group revenue rose nine percent to €12.2 billion.

Air travel prices are influenced by the cost of running flights, and fuel is a major part of that cost. When global oil supply is disrupted or demand rises, energy prices can increase. Airlines then face higher costs for kerosene, the fuel used by aircraft. When supply is ample or demand weakens, the pressure can move in the opposite direction.

The article gives a clear example. The near-total closure of the Strait of Hormuz pushed global energy costs higher. Lufthansa expects its 2026 fuel bill to reach €9.3 billion, two billion euros above the previous year. Its finance chief said fare increases were necessary to pass the higher kerosene costs to passengers.

The final ticket effect also depends on competition, demand, and hedging. Lufthansa hedged more than 80 percent of its 2026 fuel costs, limiting some volatility. Even so, it expects double-digit fare increases next year and warns that fuel costs could rise again in 2027.