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Lufthansa warns of major restructure after €2bn Q1 loss

By Frank Prenesti

Date: Wednesday 03 Jun 2020

Lufthansa warns of major restructure after €2bn Q1 loss

(Sharecast News) - German flag carrier Lufthansa reported first quarter net losses of €2.1bn (£1.87bn) an warned of a major restructuring as it felt the initial impact of the coronavirus pandemic.
The airline, hammered by the almost total collapse in travel as governments imposed lockdowns to halt the spread of the virus, said it would be cutting jobs as part of its plans to restore its finances.

Lufthansa's supervisory board this week agreed a €9bn state-backed loan in return for giving up 24 take-off and landing slots at Frankfurt and Munich.

The quarterly net loss compared to a loss of €342m year on year, and included write-downs of €266m on its fleet as it decommissioned 40 planes, and €57m on budget airline Eurowings. Lufthansa added that it was currently burning through €800m a month.

April passenger numbers plunged 98% and by 26% year on year.

"Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent," said Lufthansa chief executive Carsten Spohr.

"In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this."

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.

"Even after the end of the crisis, which is expected to end in 2023, the group expects its fleet to remain 100 aircraft smaller," Lufthansa said.

Lufthansa said it had also lost €950m on fuel price hedges as the global oil price sluimped in the face of a collapse in demand.

It added that 40% of its fleet, or 300 aircraft, would be grounded in 2021 and 200 aircraft 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," Lufthansa said.

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