Taxes imposed on goods and services weigh heavily on Lufthansa Technik - Imposed customs fees on aircraft maintenance services provided by German company, Lufthansa Technik, by the United States government.
In the first half of 2025, Lufthansa Technik, a leading global provider of aircraft maintenance, repair, and overhaul services, reported a 13.1% increase in revenue to €4 billion. However, the company's adjusted EBIT reached a record €310 million, with costs rising faster than revenue, causing margins to decline by 0.9 percentage points year-over-year to 7.8% [1].
The culprit behind this cost pressure is the U.S.-imposed tariffs on goods exported from the EU. A 15% tariff, effective from July 27, 2025, has increased Lufthansa Technik's direct and indirect supply costs [1]. This tariff agreement adversely affects margins, as higher tariffs pass through to the cost base faster than revenues can adjust.
The uncertainty about the longevity of the U.S.-EU trade deal poses risks. A possible reinstatement or increase of tariffs by the incoming U.S. administration in 2026 could disrupt Lufthansa's fleet renewal and capital expenditure plans, indirectly pressuring Lufthansa Technik's service demand [3].
Despite these challenges, Lufthansa Group is proactively managing other cost drivers, such as fuel cost hedging. However, tariff exposure remains a vulnerability not easily hedged against [3].
Lufthansa Technik aims to stick to its goals despite the impact of U.S. tariffs. The company, which employs more than 22,000 people [3], has set a goal to achieve a revenue of over ten billion euros and an operating result of over one billion euros by 2030 [3].
The new CFO of the company, Christian Leifeld, stated that U.S. tariff policies are burdening the company and causing material and supplier costs to rise. However, no new information regarding the passing on of higher costs due to tariffs to customers in the long run was provided [1].
As Lufthansa Technik continues to navigate these challenges, it is preparing for the potential impact of the trade agreement between the EU and the U.S. [3]. The company's maintenance subsidiary, Technik, experienced growth in the second quarter despite increased cost pressures, with revenue reaching nearly two billion euros [2]. However, earnings before interest and taxes were below the level of the previous quarter (161 million euros) [2].
Sources: [1] Lufthansa Technik Interim Report, July 2025 [2] Lufthansa Technik Q2 2025 Earnings Release, August 2025 [3] Lufthansa Technik Press Conference, September 2025
Community policy discussions within Lufthansa Group may need to consider the impact of U.S. tariffs on its business, especially in light of the financial burdens imposed on Lufthansa Technik. The ongoing tariffs escalate employment policy considerations, as the increased costs could potentially affect the company's workforce changes or expansion plans in the industry. The company, with over 22,000 employees, aims to maintain its performance goals despite these challenges, including the goal to achieve a revenue of over ten billion euros and an operating result of over one billion euros by 2030.
