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Lufthansa Q1 2020 result in the crisis

Lufthansa aircraft are on the tarmac at Frankfurt Airport.

Ralph Orlowski | Reuters

Lufthansa reported a significant loss for the first quarter and said restructuring was necessary because the results were “significantly impacted” by the Covid 19 pandemic.

The German airline recorded a net loss of EUR 2.1 billion on Wednesday in the first three months of the year. This compared to a loss of 342 million euros in the same period last year.

Passenger numbers fell by more than 26% in the first quarter compared to the previous year.

Impairments contributed to the loss, with Lufthansa recording an impairment of 266 million euros for decommissioned aircraft. In addition, EUR 1

00 million was written down on the book value of the catering unit LSG North America and EUR 57 million on the low-cost airline Eurowings.

Wednesday’s results were originally scheduled for April 30, but were postponed due to the uncertainty surrounding the Covid 19 pandemic.

“Worldwide air traffic has practically come to a standstill in the past few months. This has had an unprecedented impact on our quarterly results. Given the very slow recovery in demand, we now have to take extensive restructuring measures to counteract this,” said Carsten Spohr, CEO of Lufthansa said in a statement.

There are indications that the second quarter will also be severely affected by the pandemic as airlines worldwide continue to be affected by travel bans.

Lufthansa saw a 98.1% drop in passenger numbers in April compared to the previous year, while passenger and freight figures were also “significantly lower” in May. The group parked 700 of its 763 aircraft in April and May.

The airline does not expect the current crisis to end before 2023 and predicts that 300 aircraft will remain parked in 2021 and 200 in 2022.

“From mid-June, however, the airlines in the Lufthansa Group will significantly expand their flight plans to around 2,000 weekly connections to more than 130 destinations worldwide,” the company said.

“The aim is to make as many travel destinations as possible accessible to vacationers and business travelers again.”

Smaller fleet

To cut costs, the German airline said it had reduced the working hours of 87,000 employees and postponed or canceled some projects planned before the crisis.

In addition, Brussels Airlines and Austrian Airlines – part of the Lufthansa Group – will reduce their fleet by 30% and 20% and their number of employees by 25% and 20%, respectively.

Further restructuring measures are also being carried out in other companies that are part of the broader Lufthansa Group.

These measures are based on an agreement with the federal government on financial support. The company agreed to transfer up to 24 launch sites to competitors at Frankfurt and Munich airports in order to receive 9 billion euros in support of the federal government.

As part of the deal, the federal government will receive a 20% stake in Lufthansa.

Airline shares have fallen more than 42% since the beginning of the year.

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