Adds share price in headline, context to lead paragraph, adds fresh bullet points, details on jet fuel costs for other carriers in 6-7.

By Joanna Plucinska

LONDON/BERLIN, May 6 (Reuters) - Lufthansa LHAG.DE kept its 2026 profit outlook on Wednesday, saying hedging, higher fares and cost cuts would help offset a 1.7 billion euro ($2 billion) jet-fuel hit to costs, sending shares up 2% even as labour strikes cloud the year ahead.

The group would mitigate the impact of higher jet fuel in the next quarters "through increased revenue from ticket sales, optimised network planning, and further cost-saving measures," Lufthansa said in a statement.

The airline said the crisis in the Middle East, which had send jet-fuel prices surging due to a drop in supply, was boosting demand as travellers rerouted via its hubs.

"We are resilient in our ability to absorb these impacts," Chief Executive Carsten Spohr said in a statement.

European airlines are expected to be shielded from the initial fallout of the jet fuel shock in the first quarter, though some, such as Air France-KLM AIRF.PA, have adjusted their outlooks for 2026 with jet fuel prices set to remain high.

Air France-KLM projected its fuel bill will rise by $2.4 billion this year, while Delta DAL.N said it would see a $2 billion hike in its second quarter alone.

Bernstein analyst Alex Irving said in a note that much of Lufthansa's strength comes from "blockbuster" yields, but cautioned that the outlook for the second half was still unclear.

Lufthansa reported an adjusted operating loss of 612 million euros ($717 million) in the January-March period compared with a loss of 659 million projected by a company-compiled analyst poll. That is an improvement from an adjusted operating loss of 722 million euros a year ago.

2026 FORECAST TO STAY, IF NO FURTHER STRIKES OCCUR

It maintained its forecast for 2026 of a significantly higher adjusted operating profit than the 1.96 billion euros it earned in 2025.

Chief Financial Officer Till Streichert said the outlook would be maintained "provided there are no fuel supply bottlenecks or further strikes."

Lufthansa cabin crew and pilot unions called for strikes throughout April. Lufthansa issued two profit warnings in 2024 due to costs linked to labour disruptions.

Lufthansa is pursuing an ambitious turnaround program across its airlines, aiming to boost its profit margin to 8% to 10% between 2028 and 2030. The airline has already cut 20,000 flights this summer to limit capacity amid jet fuel shortage worries.

($1 = 0.8522 euros)