By Cristina Gallardo

Deutsche Lufthansa's shares dropped after pilots voted in favor of a possible strike and analysts raised doubts over the group's midterm targets.

Shares fell 6.2% to 7.28 euros in early afternoon trading in Europe on Tuesday. Pilots for Lufthansa's flagship airline and its cargo unit voted to support industrial action as part of a dispute with the company on pensions, pilot union Vereinigung Cockpit said. The vote comes after seven negotiating rounds failed, it added.

"We now expect Lufthansa to take this signal from the workforce seriously and finally present a negotiable offer for the company pension scheme," the union said.

Lufthansa said it welcomed the openness to new talks.

"The focus must remain on finding answers that are compatible with the economic performance of Lufthansa Classic," the airline said.

The airline group--which also includes SWISS, Austrian Airlines, Brussels Airlines and ITA Airways--has floated plans to cut about 4,000 jobs by 2030, mostly in Germany, as it continues to roll out artificial intelligence and automation of tasks. Lufthansa, which employs around 102,000 people worldwide, said the cuts would mainly affect administrative roles.

The group also announced new targets for 2028-30, including an adjusted margin on earnings before interest and taxes of between 8% and 10%, and adjusted return on capital employed before taxes of between 15% and 20%.

On Monday, market reaction to the goals was muted. On Tuesday, analysts questioned Lufthansa's ability to meet these goals.

"We had a favorable view of the presentations and management but also think the ability to achieve the target is highly dependent on the economic backdrop," UBS analysts said in a research note.

J.P. Morgan analyst Harry Gowers, who rates Lufthansa shares as underweight, said the stock remains on the negative catalyst watch list into third-quarter results.

He said there are question marks over the group's inflation assumptions and potential union pushback on plans to boost staff productivity. He also questioned whether revenue per available seat kilometer would support margins, and how much the airline's forecasts factor in Germany's friendlier aviation policies.

"We are yet to be convinced on the equity story and airline turnaround," Gowers said.

Deutsche Bank analysts said Lufthansa's financial performance hasn't improved a great deal despite making progress to the punctuality and regularity of flights.

"Lufthansa still has a way to go to get back on track" and lift its adjusted EBIT margin, Deutsche Bank analysts said in a note.

The stock is up nearly 18% in the year to date.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

September 30, 2025 07:47 ET (11:47 GMT)

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