The German Lufthansa has deep pockets after the pandemic. The leadership decided to lay off in the fight against bankruptcy. The plan is to lay off thousands of administrative staff and remove a fifth of senior management and management positions for now. At the end of June this year, Lufthansa employed almost 130,000 people.
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In addition to some redundancies, Lufthansa is considering redundanting another 22,000 employees, or about 16 percent. At the same time, the carrier plans to “cut” its fleet by approximately one hundred aircraft. It will also halve investment in new aircraft, with a maximum of 80 acquired by 2023.
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The current cost reduction plan should reduce the company’s expenses to approximately 1.3 billion euros this year and next. Even before the pandemic, Germany’s Lufthansa estimated spending at 3.5 billion euros.
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The German company Lufthansa reported a record operating loss of 1.7 billion euros (44.3 billion CZK) in the second quarter, despite cost reductions. This is the worst result in 67 years of the company’s existence. A year earlier, the company had a profit of 754 million euros. The largest airline in Europe stated in the results report that the aviation sector is unlikely to reach pre-coronavirus crisis levels until 2024.
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The drop in demand for air travel due to the pandemic led Lufthansa to carry 96 percent fewer passengers from April to June than in the same period last year. Revenues of the company fell by 80 percent to 1.89 billion euros (49.3 billion CZK).
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“We do not expect demand for air travel to return to pre-crisis levels before 2024,” said Carsten Spohr, head of the company. He added that the group would not avoid “far-reaching restructuring”.
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In the third quarter, the carrier plans to increase the capacity of short and medium-haul flights to about 40 percent of last year, and the capacity of long-haul flights to 20 percent.
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The company expects to close the second half of this year with an operating loss due to limited long-haul operations and to report a significant decline in operating profit for the full year.
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Lufthansa said revenues would be clearly negative in the second half of the year. According to the carrier’s management, the cash flow will not change to positive until 2021.
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Today’s reports from the German carrier point to huge losses suffered not only by Lufthansa, but by the entire aviation industry. The British company IAG, for example, recorded a record loss of 1.36 billion euros. Air France-KLM is dealing even deeper with damage – worth € 2.61 billion.
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Germany’s largest airline, Lufthansa, received the first tranche of state aid in early July to help the company overcome the negative effects of the coronavirus crisis. A spokesman for the company announced that the state bank KfW had provided the airlines with the first billion euros (almost 27 billion crowns) from the agreed three billion loan.
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The total value of the rescue package for Lufthansa is nine billion euros. In addition to the loan from KfW, it also includes, for example, a capital injection from the government, which will acquire a fifth share in Lufthansa.
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