Lufthansa has seen shares slump after adjusting its earnings forecast.

The airline said, as a result of the revenue development in the passenger and cargo businesses, which are below expectations, it now expected operating profit for the current financial year of approximately EUR1 billion. 

Previously the company had been forecasting an operating profit for 2014 of EUR 1.3 to 1.5 billion.

Shares in the company closed down 14.19 per cent on Wednesday.

“The revenue risks mentioned when we presented the quarterly figures in early May have unfortunately materialised,” said Simone Menne, chief officer finances at Deutsche Lufthansa AG.

The Group had already warned against increasing risks to the earnings forecast in the first quarterly reports.

Above all it is the Group’s American and European business that has suffered from increasing excess capacity, which leads to falling prices on these routes.

“We will therefore noticeably reduce our capacities during the winter timetable period,” emphasised Menne.

Strong capacity growth by state-owned Gulf carriers was a major concern, she added.

They are advancing ever further into the European market, also by means of investments in European airlines, she explained

Menne emphasised: “The current development underlines the importance of Score for the group.

“We are achieving a sustainable reduction of our unit costs and now aim to stabilize the revenue trends, in order to counteract an ever intensifying competitive situation,” she concluded.