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Lufthansa grounds 95% of flights and looks to state aid for survival

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Airplanes of German carrier Lufthansa are parked at the Berlin Schoenefeld airport, Germany, March 16, 2020. Photo: Fabrizio Bensch/ Reuters

Germany’s Lufthansa is slashing its flight schedule by 95% by 19 April, grounding 700 out of 763 airplanes, as it battens down to try and survive the coronavirus pandemic gripping Europe.

Presenting its annual figures in Frankfurt today, Lufthansa chief executive Carstan Spohr said that the coronavirus “has placed the entire global economy in an unprecedented state of emergency,” and “no one can foresee the consequences.”

The Lufthansa Group, which also includes Swiss, Brussels, and Austrian Airlines, has been in talks with the German government about a potential loan from the KfW state development bank. It also suspended its dividend payment for 2019.

“The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid,” said Spohr.

The German government last week announced that it would offer loans with “no upper limit” to companies, through the KfW bank.

Spohr told Bild newspaper earlier this week that Lufthansa was poised to fly in supplies to Germany if necessary, in what he described as an “airbridge.” The last time an airbridge was necessary in Germany was in 1948-1949, when the Allies dropped supplies into West Berlin, which was cut off by Soviet forces.

“We are doing our utmost to help ensure that supply chains for many thousands of businesses do not break down by mobilising additional capacity for air freight transport,” said Spohr today.

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Lufthansa is currently in the process of flying back tens of thousands of Germans, mainly tourists, who are stranded abroad. Foreign minister Heiko Maas said this week that the government has earmarked some €50 million to bring its citizens home.

The coronavirus pandemic is likely to financially cripple the world’s airlines, all of whom have already announced drastic capacity cuts of around 80% in the past week or two.

In the US, airlines have requested more than $50 bn in government support. Australia’s Qantas has ordered the bulk of its 3,000-person workforce to take leave. The Italian government is stepping in to bail out national carrier Alitalia.

The CAPA Centre for Aviation this week predicted that governments needed to step in and take action, warning that “by the end of May 2020, most airlines in the world will be bankrupt.” 

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