*

Lufthansa expects five-year delay on Boeing 777X

deliveries

*

Airlines forced to fly older models

*

Lufthansa reports results on Oct. 29

*

Air France-KLM hit by lower ticket bookings tied to Paris

Olympics

*

BA to cancel some long-haul flights due to engine delivery

delays

*

(Updates with Lufthansa statement in paragraphs 8-9)

By Joanna Plucinska

LONDON, Oct 28 (Reuters) - Europe's major airlines

including Lufthansa and Air France-KLM are expected to report

another quarter dragged down by rising costs and limited

planes, with no sign of delivery delays from planemakers Boeing ( BA )

and Airbus improving any time soon.

While demand has remained stable, costs for maintenance,

adverse weather, air traffic control issues and disruption in

the Middle East have continued to weigh on carriers.

Delays of new plane deliveries are the biggest ongoing

headache, though, forcing airlines to fly older models that are

more expensive to maintain and use more jet fuel and cut traffic

estimates.

Lufthansa Chief Executive Carsten Spohr warned the

airline is now expecting a five-year delay on its Boeing

777X deliveries.

"We don't expect to get them until 2026. And we need them,"

he told journalists earlier this month.

The German carrier is expected to report on Tuesday a

third-quarter operating profit of 1.3 billion euros ($1.4

billion), down 9% from a year ago and a margin of 12.1%,

according to a company-led analyst poll.

The airline is losing up to $550,000 per flight on its route

from Frankfurt to Beijing as a result of flying older jets with

few passengers, according to a Bloomberg report, as it struggles

with competition from Chinese carriers who still fly over

Russian airspace.

"European airlines are in an extremely unequal competitive

position with China, as well as with airlines from the Persian

Gulf and Bosporus," a Lufthansa spokesperson told Reuters in an

emailed statement.

"All airlines from these countries benefit from low location

costs, different social standards and high government investment

in the aviation sector."

British Airways, owned by IAG, has said it will

cancel more long-haul flights due to delivery delays from engine

maker Rolls-Royce.

Air France-KLM is also set to take a hit on

third-quarter revenue, according to analysts, due to lower

ticket bookings tied to the Paris Olympics. It reports results

on Nov. 7.

These challenges have dragged airline shares down in the

last six months. And while they've recovered slightly in the

last month, investor worries over the sector's health have

prevailed.

Only IAG has seen a substantial hike in its share price, up

over 20% in the last six months as it continues to build on its

strength in the North Atlantic market and faces fewer delivery

delays.

The airline is expected to report on Nov. 8 an operating

profit of 1.78 billion euros, according to a company-led analyst

consensus, up 2% from last year.

BLEAK OUTLOOK

Some airlines have said that the worst is yet to come.

Delivery delays could hit harder in 2026 as current supply chain

issues impact new plane production.

That said, with fewer available seats due to constrained

capacity, airlines can charge higher fares if demand stays

robust as it is expected to, analysts say.

But that dynamic does not seem to be playing out.

"Ordinarily one might expect a lower level of capacity as a

result of these delays to boost results, in a robust demand

environment. Yet most carriers in Europe and North America are

producing disappointing results," said Neil Glynn, managing

director at AIR Control Tower.

They will also get a financial boost next year from lower

jet fuel prices if they lower the amount of hedges they have.

($1 = 0.9228 euros)

(Additional reporting by Julia Payne; Editing by Josephine

Mason and Emelia Sithole-Matarise)