The news was received negatively on the stock exchange. Shortly after the start of trading on Monday morning, the Lufthansa-Share down more than six percent below the 8 euro mark. A little later it was still 3.03 percent in the red at 8.236 euros, but was still one of the weakest values in the MDax.
The extensive business failure as a result of the Corona crisis has put the group like other airlines in a struggle for existence. Only government aid worth billions saved Lufthansa from collapse in the summer. Nevertheless, the share has lost around half of its value since the turn of the year.
According to the assessment of a stock trader, the statements of the management board have a negative effect, even if the capacity reduction was already known. According to the industry experts at the analysis company Mainfirst, the letter reflects the latest developments in ticket bookings. You attribute a price target of just 2 euros to the Lufthansa share and continue to advise selling the shares.
Other airlines like Ryanair and the societies of IAG -Group like British Airways and Iberia have cut their already scaled-down flight plans for the winter even more because of the pandemic. IAG, for example, no longer expects the group to be able to stop the outflow of funds in ongoing business in the fourth quarter, which it initially planned.
IAG and Ryanair have raised billions in loans and fresh money from investors because of the crisis. The governments of Germany, Austria, Switzerland and Belgium saved the Lufthansa Group from bankruptcy with a total of nine billion euros. As a result, the German state became a major shareholder in Lufthansa. Thousands of jobs are at stake at airlines.
In view of the worsening of the situation, the previous cost-cutting measures are not sufficient from the point of view of the Lufthansa management. It was possible to reduce the outflow of funds from one million euros per hour at the beginning of the pandemic to “only” one million every two hours, wrote the executive board around Lufthansa boss Carsten Spohr. Nothing has changed in terms of drama.
It is therefore “inevitable to shut down business operations even further in winter 2020/21 and to put as many areas as possible into ‘winter mode’ ‘from mid-December”. Among other things, 125 aircraft that were intended for use in the winter flight plan are to be decommissioned again. “We can no longer keep our original plan of reaching 50 percent of the capacity offered by the end of the year,” it says.
In the first nine months Lufthansa suffered an operating loss of almost 4.2 billion euros. “This shortfall will increase significantly in the fourth quarter,” wrote the board of directors. A reliable statement about the development of the industry is more difficult than ever. Nevertheless, the executive board is “firmly determined to keep at least 100,000 of the 130,000 jobs in the Lufthansa Group today”.
At the end of September, the MDax group had liquid funds of 10.1 billion euros according to its own information. This includes 6.3 billion from the aid that Lufthansa companies received from their home countries Germany, Austria, Switzerland and Belgium. Including equity measures, 9 billion euros were made available.
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