* Lufthansa sees fuel bill 4.9 bln eur in 2016 vs 5.7 bln2015
* Sees adj EBIT rising further in 2016
* Still faces challenge of low cost rivals
By Victoria Bryan
BERLIN, Jan 8 (Reuters) - Lufthansa said itexpected its fuel bill to be 14 percent lower in 2016 thanks tofalling oil prices, which will help boost its profit next yearafter record earnings in 2015.
Oil has dropped around 70 percent since June 2014, touchinglevels not seen in over a decade this week, bringing a boon toairlines because jet fuel is one of their main costs.
Lufthansa expects a fuel bill of 4.9 billion euros ($5.3billion) in 2016 after 5.7 billion euros in 2015, it said onFriday in presentation slides.
That and other efforts to reduce costs will help boostprofit in 2016, from expected adjusted earnings before tax andinterest of between 1.75 and 1.95 billion euros in 2015.
Legacy airlines like Lufthansa are under increasing pressurefrom fast growing low-cost rivals.
"Many airlines will increasingly get benefits of low fuel ashedges unwind," independent aviation consultant John Stricklandsaid. "This will certainly bring into sharp focus areas of highcost in the legacy airlines such as labour and it comes at atime when Ryanair is piling on the competitive pressure inGermany with massively expanded capacity."
Airlines body IATA predicts European airlines will see morebenefit in 2016 from lower fuel prices because hedges made whenthe oil price was higher will unwind.
Air France-KLM shares were downgraded to "sell"from "neutral" by UBS on Friday, with the broker saying thatamong other worries, it was concerned that the majority of thefuel benefit was likely to be given back to consumers in theform of lower ticket prices.
Lufthansa said on Friday it expected prices to fall again in2016, partly as it expands the Eurowings low-cost unit, itsresponse to increasing competition from the likes of Ryanair and easyJet.
"Ultimately, fares are down to the balance between supplyand demand. No matter which way you look at the oil price andhedging issue, low cost carriers always have the advantagebecause of their lower fares and costs," Jonathan Wober, chieffinancial analyst at CAPA-Centre for Aviation, told Reuters.
Lufthansa also said profits would drop in its maintenanceand catering divisions, though did not provide further details.
Brokerage Kepler Cheuvreux estimates an operating result of2.1 billion euros in 2015, which it says is 15 percent aboveconsensus expectations, and 2.23 billion euros in 2016, or 19percent above consensus expectations.
Lufthansa is due to report 2015 results on March 17, atwhich point it is expected to provide a more detailed outlookfor the current year.($1 = 0.9174 euros) (Reporting by Victoria Bryan; Additional reporting by PeterMaushagen; Editing by Elaine Hardcastle)