German carrier Lufthansa said on Thursday that it cut its losses by two-thirds in 2021, but warned of uncertainty for the industry from the coronavirus pandemic and the Russian invasion of Ukraine.

Europe’s largest airline group – which includes Eurowings, Austrian, Swiss and Brussels Airlines – reported net loss of €2.2 billion in 2021, compared with a bottom-line loss of €6.7 billion a year earlier.

Lufthansa said it expected business to improve this year, but “major uncertainties” surrounding Ukraine and the future course of the pandemic made it difficult to provide a more detailed forecast. Russia’s invasion of its neighbour has disrupted Lufthansa’s services, with the airline suspending flights to both Russia or Ukraine. 

The escalation in the conflict involving the major energy supplier Russia has also given a push to already high prices for fuel. The rising cost of oil would create “additional burdens” for the group, Lufthansa said, while saying it expected to weather increases better than competitors.

The rising cost of oil would create “additional burdens” for the group, Lufthansa said, while saying it expected to weather increases better than competitors

Increases in airport charges and the “remaining uncertainties regarding the course of the pandemic” further troubled the outlook for the industry.

Passenger numbers increased in 2021 by 29 per cent compared to the previous year, when travel restrictions due to the pandemic caused the figure to tumble. “We are very certain that air traffic will experience a strong upswing this year,” chief executive Carsten Spohr said in a statement.

Lufthansa said it expected “an average capacity of more than 70 per cent” in 2022 compared to the pre-pandemic year 2019, up from 40 per cent this year. The group also said it expected “further year-on-year improvements” for 2022 in its operating result, where it cut losses to €2.3 billion from €5.5 billion, despite higher-than-expected restructuring costs.

Lufthansa recorded its first quarterly operating profit since the start of the pandemic in the third quarter of 2021, but slipped back to a loss of €271 million in the period from October to December.