UK markets close in 3 hours 22 minutes

Coronavirus: Lufthansa books €2bn loss as it plans drastic cost cuts

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
SCHOENEFELD, GERMANY - JUNE 01: Passenger planes of airline Lufthansa that have been temporarily pulled out of service stand parked at Berlin-Brandenburg Airport during the coronavirus crisis. Photo: Sean Gallup/Getty Images

German flag carrier Lufthansa (LHA.DE) reported on Wednesday that the first quarter net losses due to the impact of the coronavirus pandemic came to €2.1bn (£1.87bn, $2.35bn ), as lockdowns brought the global aviation industry to a near-total halt.

This compared to a loss of €342m during the same three months last year. The first quarter 2020 loss included write-downs of €266m on its commissioned planes, and €57m on budget airline Eurowings.

Like all of its global competitors, Lufthansa was forced to ground nearly all of its fleet for the past couple of months as global travel bans came into force. It suffered a 98% slump in passengers in April, and a 26% drop in passenger numbers over the quarter compared to the same period last year.

The next step for Lufthansa will be cost-cutting measures, including job reductions, according to the airline. It has already put 87,000 of its around-137,000 staff onto short-work hours.

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

The airline this week agreed to the European Union’s demands to surrender landing slots at several of its German hubs in order to get approval for its €9bn bailout from the German government.

The German government will take a 20% stake in Lufthansa as part of the bailout, with the options to raise that by a further 5% plus one share, in the event of a takeover attempt.

Lufthansa said it expects 300 airplanes will remain grounded in 2021, and that it does not expect the effects of the coronavirus crisis to be past until 2023.  

“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,” Lufthansa said.