Lufthansa posts 2.1 billion euro loss after ‘drastic decline’ in air travel in the first quarter

Lufthansa airplanes are parked on the tarmac at Frankfurt airport, Germany.

Ralph Orlowski | Reuters

Lufthansa reported a considerable loss for the first quarter and mentioned restructuring was essential as its outcomes have been “significantly impacted” by the Covid-19 pandemic.

The German airline reported a internet loss of 2.1 billion euros ($2.35 billion) for the first three months of the yr on Wednesday. This in comparison with a loss of 342 million euros over the similar interval the yr earlier than.

It comes as passenger numbers dropped by greater than 26% in the first quarter, in comparison with a yr in the past. 

Write-downs contributed to the loss, with Lufthansa recording an impairment cost of 266 million euros on decommissioned plane. It additionally wrote down 100 million euros on the guide worth of its catering unit LSG North America and 57 million euros on finances airline Eurowings.

Wednesday’s outcomes have been initially scheduled for April 30, however have been postponed on account of the uncertainty surrounding the Covid-19 pandemic. 

“Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent. In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this,” Carsten Spohr, chairman of the government board of Lufthansa, mentioned in an announcement.

There are indications that the second quarter may even be closely impacted by the pandemic, as travel bans throughout the world continued to hit airways. 

Lufthansa reported a 98.1% drop in passenger numbers in April from a yr in the past, whereas passenger and freight numbers in May have been additionally “significantly lower.”  The group parked 700 of its 763 plane in April and May. 

The airline mentioned it does not count on the present disaster to finish earlier than 2023, and forecast that 300 airplanes will stay parked in 2021, and 200 in 2022. 

“From mid-June, however, the Lufthansa Group’s airlines will be significantly expanding their schedules to around 2,000 weekly connections to more than 130 destinations worldwide,” the firm assertion mentioned.

“The aim is to make as many destinations accessible again for holidaymakers and business travellers.”

Smaller fleet

In an effort to chop prices, the German airline mentioned it had lowered the hours of 87,000 workers and postponed or cancelled some tasks deliberate previous to the disaster.

Furthermore, Brussels Airlines and Austrian Airlines — a part of the Lufthansa group — will minimize their fleet by 30% and 20% respectively, in addition to lower their headcounts by 25% and 20% respectively. 

There may even be further restructuring measures in different firms that are a part of the wider Lufthansa Group.

These measures come after an settlement with the German authorities for monetary help. The firm agreed handy over as much as 24 take-off slots to rivals at Frankfurt and Munich airports in trade for 9 billion euros ($10.05 billion) in help from the German authorities.

As a part of the deal, the German authorities will get a 20% stake in Lufthansa.

Shares of the airline are down greater than 42% year-to-date.

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