* Lufthansa capacity to rise 4 pct organically in 2017
* Lufthansa says further 8 pct from Air Berlin, Brussels
* Lufthansa sees fuel bill rising to 5.3 bln eur in 2017
(Adds more details from presentation)
By Victoria Bryan
BERLIN, Jan 6 Lufthansa outlined plans
for 4 percent capacity growth in 2017, not including recent
deals to expand budget brand Eurowings, as Europe's airlines
engage in a race for customers against a backdrop of rising fuel
The German carrier said in an investor presentation on
Friday that its network airlines - Lufthansa, Austrian and Swiss
- would grow the number of seats on offer by 3 percent, while
Eurowings would grow 19 percent.
Including recent deals to lease 38 planes and crew from Air
Berlin plus take over Brussels Airlines, group growth would be a
reported 12.5 percent, according to the slides.
UBS earlier downgraded Lufthansa shares to "sell" from
"neutral", saying it was concerned that yields - a measure of
pricing - would remain negative in 2017, as European carriers
continue to add seats despite likely being unable to pass on
increased fuel costs to passengers.
Expanding Eurowings is Lufthansa's response to the rise of
low-cost carriers in Europe, notably Ryanair, which is
set to usurp Lufthansa as Europe's largest carrier by passenger
numbers, after the Irish budget airline said it carried 117
million people last year, a 15 percent increase on 2015.
Up until the end of November the Lufthansa group had carried
almost 102 million passengers and typically carries 8-9 million
in the last month of the year, meaning it is unlikely to catch
Ryanair when it reports annual passenger numbers on Tuesday.
Showing a wish to take some capacity out of the market as
well, Lufthansa said that of the 33 A320 planes coming to
Eurowings from the Air Berlin lease deal, up to 20 would be used
to replace existing Eurowings planes that currently run at
Lufthansa estimated its fuel costs would rise to 5.3 billion
euros ($5.60 billion) in 2017, from 4.9 billion in 2016.
The group had previously predicted a 2016 fuel bill of 4.85
billion euros and said fuel costs had risen more than expected
in the fourth quarter due to the rising oil price and a
Lufthansa also on Friday confirmed a forecast for 2016's
adjusted earnings before interest and tax (EBIT) to remain
around 2015's level of 1.8 billion euros. It is expected to give
a first forecast for 2017 profit when it reports full-year
results in March.
Barclays analysts earlier said they expected it would be
difficult for Lufthansa to maintain adjusted EBIT at 2016 levels
this year, given rising fuel prices.
($1 = 0.9470 euros)
(Reporting by Victoria Bryan; Editing by Adrian Croft)