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(Bloomberg) -- Deutsche Lufthansa AG joined major European airline companies in predicting an earnings boost this year as travel demand continues to swing back from the coronavirus pandemic.

The region’s biggest airline group said it expects a “significant improvement” on the €1.5 billion ($1.6 billion) adjusted earnings before interest and taxes result it reported for 2022. Summer vacations to Mediterranean countries and travel on North Atlantic routes will be particularly strong, the carrier said.

“Lufthansa is back,” Chief Executive Officer Carsten Spohr said in a statement. “In just one year, we have achieved an unprecedented financial turnaround.”

Lufthansa is the last major European airlines to report earnings for last year, joining Air France-KLM and British Airways parent IAG SA in predicting a recovery approaching pre-pandemic levels in 2023. While European household and company budgets continue to get squeezed by high inflation, demand for business travel and summer getaways in particular has remained robust

Lufthansa rose as much as 48 cents, or 4.9% to €10.34, the highest since early 2020. The stock has gained 32% this year, after advancing 26% in 2022.

The global aviation sector as a whole continues to enjoy a comeback since most countries lifted their coronavirus restrictions. Airbus SE said last month that it’s increasing the rate of production on its largest aircraft to meet rebounding long-haul demand, and budget carriers like Ryanair Holdings Plc have said that summer bookings point to a strong summer season.

Capacity will rise to between 85% to 90% compared with pre-pandemic levels. At the same time, Lufthansa cautioned that persistent bottlenecks in the European aviation system will limit capacity to about 75% in the first quarter.

The airline said it expects to make further progress this year toward hitting its earnings margin target of a minimum of 8% by 2024. Spohr, who had his contract renewed by five years on Thursday, has said the target is required to cut debt Lufthansa incurred during the pandemic, when the airline group was bailed out by the government.

“Lufthansa is coming out of Covid with a better competitive environment on short haul, which we think is sustainable,” Ruxandra Haradau-Doser, an an aviation analyst at Kepler Cheuvreux in Frankfurt, said before the earnings release. At the same time, two thirds of Lufthansa’s short-haul business is transfer traffic, meaning passengers can easily switch to the likes of British Airways or Air France, increasing pressure on Lufthansa to maintain its standards, she said in an interview with Bloomberg Television on Thursday.

The previously high earnings at cargo division, which boomed during the pandemic, are set to fall back in 2023 as air freight rates decline. The division reported a record €1.6 billion in adjusted earnings for 2022.

The German carrier on Thursday said it will buy 22 new widebody aircraft from Airbus and Boeing Co. in an order valued at $7.5 billion at list price, as the carrier aims to meet rising long-term demand for intercontinental travel.

Lufthansa said preparations for a possible partial divestiture of its Lufthansa Technik division are proceeding according to plan, adding talks with select investors have begun. The company also said it remains in exclusive talks with Italian officials about its pursuit of Italy’s ITA Airways.

--With assistance from Alix Steel and Guy Johnson.

(Updates with stock reaction in fifth paragraph.)