Lufthansa Stock 2025: Optimized Business Model and Key Challenges Ahead

• The Bull Case: Why Analysts Are Upgrading Lufthansa
• The Bear Argument: Labor Costs Could Clip Lufthansa's Wings
• 2026: The Make-or-Break Year
• Frequently Asked Questions

Lufthansa's stock is currently experiencing a fascinating tug-of-war between analyst Optimism and labor challenges. With Kepler Cheuvreux significantly raising its price target to €11 while Verdi union demands 6% wage hikes for ground staff, investors are weighing restructuring gains against rising personnel costs. This analysis dives into the airline's turnaround strategy, technical indicators suggesting upward momentum, and the make-or-break factors that will determine Lufthansa's performance in early 2026.

The Bull Case: Why Analysts Are Upgrading Lufthansa

Kepler Cheuvreux's recent upgrade from "Hold" to "Buy" with a €11 target (up from €7.50) wasn't just market noise - it reflected concrete progress in Lufthansa's restructuring. About 60% of planned efficiency measures should take effect by 2026, potentially lowering the cost base significantly. The analysts highlighted three key drivers: operational restructuring (€500M in projected savings), recovery in transatlantic routes (US traffic now at 92% of pre-pandemic levels), and potential reopening of Russian airspace (which previously accounted for 8% of Asian routes).

Technically, the stock looks strong - trading 10% above its 50-day moving average and 15% above the 200-day average. The RSI at 45.2 suggests there's room to run before hitting overbought territory. From a chart perspective, €8 serves as solid support, with €9 and ultimately €11 as upside targets.

The Bear Argument: Labor Costs Could Clip Lufthansa's Wings

Verdi's demands for ground staff (20,000 employees) include a 6% wage increase or minimum €250 monthly raise, with negotiations continuing through January 2026. Historically, Lufthansa's labor costs account for about 24% of operating expenses - the highest among European legacy carriers. The coming weeks will show whether management can offset these increases through productivity gains.

What makes this particularly tricky? Fuel costs remain volatile (Jet A1 prices up 18% YTD), and the airline's debt-to-equity ratio still sits at 2.1x - higher than IAG's 1.8x. The market seems to be pricing in successful cost control, but as we saw with Air France's 2023 strikes, labor disputes can erase restructuring gains quickly.

2026: The Make-or-Break Year

January's wage negotiations will be crucial - a settlement above 4% could pressure margins, while anything below might trigger strikes. The BTCC research team notes that Lufthansa's operational leverage works both ways: every 1% increase in traffic yields 3% EBIT growth, but cost overruns hit just as hard.

From an investor perspective, the €8 level has become a key psychological support. A break below might signal trouble, while holding above suggests confidence in management's ability to navigate these crosscurrents. Trading at 7.2x forward EBITDA versus IAG's 8.1x, there's still valuation upside if the turnaround delivers.

Frequently Asked Questions

What is Lufthansa's new price target?

Kepler Cheuvreux raised its target from €7.50 to €11, citing restructuring progress and improved market conditions.

When will Lufthansa's cost savings take effect?

Approximately 60% of efficiency measures should impact the cost base by 2026, with full implementation expected by 2027.

How significant are the current labor demands?

Verdi seeks 6% raises for 20,000 ground staff - this could add €85M annually if fully implemented, offsetting about 15% of planned savings.

What technical levels should traders watch?

€8 serves as strong support, with resistance at €9 and the analyst target at €11. The 50-day MA (€7.80) provides secondary support.

How does Lufthansa compare to competitors?

At 7.2x forward EBITDA, it trades at a discount to IAG (8.1x) but carries higher debt and labor cost exposure than low-cost carriers.