Lufthansa aircraft are parked on the tarmac at Frankfurt Airport, Germany.
Ralph Orlowski | Reuters
Lufthansa reported a significant loss in the first quarter and said the restructuring was necessary as its results were “significantly affected” by the Covid-19 pandemic.
The German airline reported a net loss of EUR 2.1
This is when the number of passengers dropped by more than 26% in the first quarter, compared with a year ago.
Impairment contributed to the loss, where Lufthansa recorded an impairment charge of EUR 266 million on discontinued aircraft. It also wrote down EUR 100 million on the book value of its catering unit LSG North America and EUR 57 million on Eurowing’s budget company.
Wednesday’s results were originally scheduled for April 30, but were postponed due to the uncertainty surrounding the Covid-19 pandemic.
“Global air traffic has stopped virtually in recent months. This has had an unprecedented impact on our quarterly results. Given the very slow recovery in demand, we now need to take far-reaching restructuring measures to counter this,” said Carsten Spohr, President of Lufthansa. board, said in a statement.
There are signs that the second quarter will also be strongly affected by the pandemic, as travel bans worldwide continue to hit airlines.
Lufthansa reported that the number of passengers fell by 98.1% in April compared to a year ago, while the number of passengers and freight in May was also “significantly lower.” The group parked 700 of its 763 aircraft in April and May.
The airline said it does not expect the current crisis to end by 2023, and predicts that 300 aircraft will remain parked in 2021 and 200 in 2022.
“However, from mid-June, the Lufthansa Group’s airlines will significantly expand their schedules to approximately 2,000 connections per week to more than 130 destinations worldwide,” the company statement said.
“The goal is to make so many destinations available again for vacationers and business travelers.”
In an effort to cut costs, the German airline said it had reduced the hours for 87,000 employees and postponed or canceled any projects planned before the crisis.
In addition, Brussels Airlines and Austrian Airlines – which are part of the Lufthansa Group – will reduce their fleet by 30% and 20%, respectively, and reduce their staff numbers by 25% and 20% respectively.
There will also be additional restructuring measures in other companies that are part of the wider Lufthansa group.
These measures come after an agreement with the German government on financial aid. The company agreed to hand over up to 24 take-off points to competitors at Frankfurt and Munich airports in exchange for EUR 9 billion ($ 10.05 billion) in support of the German government.
As part of the deal, the German government will receive 20% of the shares in Lufthansa.
The airline’s shares have decreased by more than 42% the year before.