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Why Is Lufthansa Cancelling Flights Amid High Demand?

Story Highlights

Unable to stay abreast of a sudden spurt in demand for travel, staff-starved Lufthansa continues to cancel flights.

Narrowing its summer schedule, Deutsche Lufthansa AG (DLAKY) has canceled another 2,000 flights from Frankfurt and Munich, due to a shortage of staff, amid accelerating demand. The German flagship carrier has said that headwinds like flight strikes, adverse weather conditions, and rising COVID-19 cases are also leading to such actions.

These new cancellations have come after the company cancelled about 770 flights between July 8 to July 14, according to a Reuters report. The company is hiring more people to have a stable flight schedule.

The airline carrier has said that the latest cancellations may impact flight schedules in Frankfurt and Munich through the end of August this year.

Meanwhile, the airline carrier has also temporarily paused the sale of some low-cost tickets to enable rebooking the flights for passengers that were impacted by cancellations, a Financial Times report stated.

In this regard, Lufthansa’s Chief Executive Jens Ritter wrote in a LinkedIn post, “The entire system is experiencing an unprecedented operational crisis, all over the world. We expected (and were hoping for) a boom in air travel, but this intensity is overwhelming.”

Wall Street’s View on DLAKY Stock

According to TipRanks, the Street has a Moderate Sell consensus rating on the stock, which is based on one Sell. DLAKY’s average price forecast of $5.81 implies 1.9% upside potential. Shares of the company have declined 25% so far this year.

Lufthansa’s Website Traffic Activity Looks Promising

According to TipRanks’ Website Traffic Tool, Lufthansa’s website recorded a 6.1% monthly rise in global visits in June, compared to May. Further, the footfall on the company’s website has grown 56.6% year-to-date, compared to the previous year.

The company’s website traffic trend signals high demand among travelers, positives of which could be reflected in its upcoming second-quarter results (to be reported on August 4).

Scrapped Flights Could Spell Trouble

The lifting of COVID-19 restrictions has resulted in a solid surge in traffic volume — to above 90% from below 20% in a very short span of time. In such a scenario, the cancellation of flights, due to shortage of staff or other factors, could impact Lufthansa’s financials.

Learn how Website Traffic can help you research your favorite stocks.

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