The only spike of influenza C virus, the hemagglutinin-esterase-fusion glycoprotein (HEF) combines receptor binding, receptor hydrolysis and membrane fusion activities. Like other hemagglutinating glycoproteins of influenza viruses HEF is S-acylated, but only with stearic acid at a single cysteine located at the cytosol-facing end of the transmembrane region. Previous studies established the essential role of S-acylation of hemagglutinin for replication of influenza A and B virus by affecting budding and/or membrane fusion, but the function of acylation of HEF was hitherto not investigated. Using reverse genetics we rescued a virus containing non-stearoylated HEF, which was stable during serial passage and showed no competitive fitness defect, but the growth rate of the mutant virus was reduced by one log. Deacylation of HEF does neither affect the kinetics of its plasma membrane transport nor the protein composition of virus particles. Cryo-electron microscopy showed that the shape of viral particles and the hexagonal array of spikes typical for influenza C virus were not influenced by this mutation indicating that virus budding was not disturbed. However, the extent and kinetics of haemolysis were reduced in mutant virus at 37°C, but not at 33°C, the optimal temperature for virus growth, suggesting that non-acylated HEF has a defect in membrane fusion under suboptimal conditions.