Deutsche Lufthansa AG

Sector: airlines

Estimated missed savings vs. renewable-transition baseline · 2022–2026

Deutsche Lufthansa AG could have saved $4.3B.

Here's the receipt.

We modelled what Lufthansa would have saved if it had undertaken a sustainability transformation -- SAF partnerships and renewable fuel supply chains -- before the 2022 and 2026 crises. Lufthansa burns ~10 Mt of jet fuel annually. At 0.2% SAF, it has almost zero renewable hedge. A 5% SAF blend with fixed-price offtake agreements would have provided structural insulation on 500,000t. The remaining 95% remains structurally exposed to fossil fuel price crises with no viable alternative at scale. Net: $5.4B savings minus $1.1B costs = $4.3B.

View line-by-line breakdown (5 items)

Line items

  • SAF partnerships and fuel hedging via renewable supply chains would have cushioned the 95% Hormuz jet fuel spike on 10 Mt consumption

    Saving$3.2B
    Sources:
    Assumptions:
    • Jet fuel price surge during 2026 Hormuz crisis
      95 percent increase

      Scope: Line items 1

      Brent surged from $65 to $118/bbl during the Feb-Mar 2026 Hormuz crisis. Jet fuel (kerosene) prices tracked at ~95% increase due to refinery margins and supply disruption fears. Airlines cannot pass through spot fuel increases on already-sold tickets.

      Strait of Hormuz Crisis Sends Oil Above $118 as Shipping Reroutes
    • Lufthansa Group annual jet fuel consumption
      10 Mt/yr

      Scope: Line items 1, 3

      Lufthansa Group (including Swiss, Austrian, Brussels, Eurowings) consumed approximately 10 Mt of jet fuel in 2024, producing ~28 Mt CO2 from flight operations.

      Lufthansa Group Sustainability Fact Sheet 2024
    Medium — Jet fuel prices surged 95% during the Feb-Mar 2026 Hormuz crisis. Lufthansa consumes ~10 Mt of jet fuel annually. Even with hedging covering ~60% of near-term consumption, the unhedged portion and mark-to-market losses on forward purchases generated ~$3.2B in excess costs on an annualised basis.

  • Fixed-price SAF offtake agreements would have structurally hedged against the 2022 jet fuel doubling ($700/t to $1,400/t)

    Saving$1.8B
    Sources:
    Assumptions:
    • Jet fuel price increase during 2022 Russia-Ukraine crisis
      100 percent increase vs 2021

      Scope: Line items 2

      Jet fuel prices doubled from ~$700/t to $1,400/t in 2022. Lufthansa had reduced hedging positions during COVID-era demand collapse and was rebuilding capacity with limited price protection.

      World Energy Outlook 2024
    Medium — Jet fuel prices doubled in 2022 from ~$700/t to $1,400/t. Lufthansa had reduced hedging during COVID and was rebuilding capacity, leaving it exposed. Estimated excess fuel cost vs 2021 baseline across ~8 Mt consumption in 2022.

  • A 5% SAF blend (~500,000t) with fixed-price contracts would have provided a structural crisis hedge on that volume

    Saving$0.4B
    Sources:
    Assumptions:
    • Counterfactual SAF blend rate for crisis hedging
      5 percent of total fuel

      Scope: Line items 3, 4

      If Lufthansa had invested in SAF offtake agreements to reach 5% blend (~500,000t) with fixed-price contracts, that volume would have been structurally hedged against fossil fuel price spikes at both the 2022 and 2026 crises.

      Internal estimate: Counterfactual analysis: 5% SAF blend represents an achievable target based on ReFuelEU Aviation mandates (6% by 2030) and peer airline SAF procurement rates, applied retroactively as a crisis hedge.

    Low — SAF offtake agreements at fixed prices would have provided a structural hedge against fossil jet fuel price spikes. At 5% SAF blend (~500,000t), stable SAF pricing would have shielded that volume from the 95% Hormuz spike.

  • SAF procurement and scale-up investment to reach 5% blend

    Cost$0.6B
    Sources:
    Assumptions:
    • Counterfactual SAF blend rate for crisis hedging
      5 percent of total fuel

      Scope: Line items 3, 4

      If Lufthansa had invested in SAF offtake agreements to reach 5% blend (~500,000t) with fixed-price contracts, that volume would have been structurally hedged against fossil fuel price spikes at both the 2022 and 2026 crises.

      Internal estimate: Counterfactual analysis: 5% SAF blend represents an achievable target based on ReFuelEU Aviation mandates (6% by 2030) and peer airline SAF procurement rates, applied retroactively as a crisis hedge.

    Medium — Cost of scaling from 0.2% to 5% SAF blend including the SAF price premium over conventional jet fuel (~$800/t) and supply chain infrastructure investment.

  • Fuel hedging programme losses during Hormuz crisis (mark-to-market on forward positions)

    Cost$0.5B
    Sources:
    Assumptions:
    • Fuel hedging mark-to-market loss estimate
      500 USD million

      Scope: Line items 5

      Airlines typically hedge 50-70% of near-term fuel at strike prices near prevailing market. A 95% price surge generates mark-to-market losses on the portion of forward purchases made pre-crisis at lower prices that must be settled at expiry.

      Internal estimate: Estimated from typical airline fuel hedging book structure with 60% coverage and call options struck at $80-90/bbl, generating losses when Brent exceeded $118/bbl during the Hormuz crisis.

    Low — Fuel hedging protects against moderate price moves but generates mark-to-market losses when prices surge beyond hedged strike prices. Estimated from typical airline hedging book exposure to a 95% price spike.

$4.3B

Medium

Bleeding

Foolishness score: 62

Show derivation
  1. 2026 Hormuz jet fuel cost surge exposure (95% price spike)Value: 0.9Weight: 0.3Strait of Hormuz Crisis Sends Oil Above $118 as Shipping Reroutes
  2. SAF adoption rate failure (0.2% vs crisis-needed hedge)Value: 0.98Weight: 0.25Lufthansa Group Sustainability Fact Sheet 2024
  3. 2022 jet fuel cost spike unhedged exposureValue: 0.7Weight: 0.2Lufthansa Group Annual Report 2024
  4. Environmental surcharge pass-through (partial credit)Value: 0.3Weight: 0.15Lufthansa Group Annual Report 2024
  5. No viable alternative fuel at scale — structural lock-inValue: 0.95Weight: 0.1World Energy Outlook 2024

Formula: Weighted sum of 2026 Hormuz jet fuel surge exposure, SAF adoption failure, 2022 fuel cost spike, environmental surcharge credit, and structural fossil fuel lock-in. Jet fuel is 25-35% of airline operating costs with no renewable alternative at scale. Lufthansa's 0.2% SAF share means it is almost entirely exposed to every fossil fuel price crisis. The 2026 Hormuz 95% jet fuel price spike hit the airline's operating costs immediately.

Weights version: v1.0

Deep dive: assumptions, methodology & revision history

Assumptions

  • Jet fuel price surge during 2026 Hormuz crisis
    95 percent increase

    Scope: Line items 1

    Brent surged from $65 to $118/bbl during the Feb-Mar 2026 Hormuz crisis. Jet fuel (kerosene) prices tracked at ~95% increase due to refinery margins and supply disruption fears. Airlines cannot pass through spot fuel increases on already-sold tickets.

    Strait of Hormuz Crisis Sends Oil Above $118 as Shipping Reroutes
  • Lufthansa Group annual jet fuel consumption
    10 Mt/yr

    Scope: Line items 1, 3

    Lufthansa Group (including Swiss, Austrian, Brussels, Eurowings) consumed approximately 10 Mt of jet fuel in 2024, producing ~28 Mt CO2 from flight operations.

    Lufthansa Group Sustainability Fact Sheet 2024
  • Jet fuel price increase during 2022 Russia-Ukraine crisis
    100 percent increase vs 2021

    Scope: Line items 2

    Jet fuel prices doubled from ~$700/t to $1,400/t in 2022. Lufthansa had reduced hedging positions during COVID-era demand collapse and was rebuilding capacity with limited price protection.

    World Energy Outlook 2024
  • Counterfactual SAF blend rate for crisis hedging
    5 percent of total fuel

    Scope: Line items 3, 4

    If Lufthansa had invested in SAF offtake agreements to reach 5% blend (~500,000t) with fixed-price contracts, that volume would have been structurally hedged against fossil fuel price spikes at both the 2022 and 2026 crises.

    Internal estimate: Counterfactual analysis: 5% SAF blend represents an achievable target based on ReFuelEU Aviation mandates (6% by 2030) and peer airline SAF procurement rates, applied retroactively as a crisis hedge.

  • Fuel hedging mark-to-market loss estimate
    500 USD million

    Scope: Line items 5

    Airlines typically hedge 50-70% of near-term fuel at strike prices near prevailing market. A 95% price surge generates mark-to-market losses on the portion of forward purchases made pre-crisis at lower prices that must be settled at expiry.

    Internal estimate: Estimated from typical airline fuel hedging book structure with 60% coverage and call options struck at $80-90/bbl, generating losses when Brent exceeded $118/bbl during the Hormuz crisis.

Annual revenue

$40.7B

Lufthansa Group Annual Report 2024

Methodology

We modelled what Lufthansa would have saved if it had undertaken a sustainability transformation -- SAF partnerships and renewable fuel supply chains -- before the 2022 and 2026 crises. Lufthansa burns ~10 Mt of jet fuel annually. At 0.2% SAF, it has almost zero renewable hedge. A 5% SAF blend with fixed-price offtake agreements would have provided structural insulation on 500,000t. The remaining 95% remains structurally exposed to fossil fuel price crises with no viable alternative at scale. Net: $5.4B savings minus $1.1B costs = $4.3B.

Revision history

  1. 1av

    Full research rewrite with data from Lufthansa Group FY2024 annual report, 2024 sustainability fact sheet, EU ETS carbon price data, and IEA WEO 2024.

  2. 2av

    Crisis-focused rewrite: replaced benchmarking line items with 2026 Hormuz jet fuel cost surge, 2022 Russia-Ukraine fuel spike, and SAF counterfactual hedge value. Removed EU ETS-focused items.

    • net_missed_savings.amount7000000004300000000
    • foolishness_score5562

Edited by: av

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