* Lufthansa to offset fuel price rise with revenue, cost

cuts

* Q1 operating loss narrows to 612 million euros, beats

forecasts

* Shares rise over 2% as Middle East rerouting lifts

demand

* Labour disruptions and strikes remain a risk, CFO says

(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

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, 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 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)