The Lufthansa Group has posted a loss of €1.3 billion for the third quarter, an improvement from the €1.7 billion loss it reported in the previous quarter. The Q3 figure is a €2.6 billion turnaround on last year’s profit.
Speaking during this morning’s analyst call presenting the figures, the group’s CEO Carsten Spohr predicted a bounceback in corporate demand once widespread testing is in place.
Spohr said: “We
saw over the summer that leisure comes back faster than corporate. But whenever I talk
to corporate customers, they say there is such a backlog of corporate demand that when testing comes into play, we will see a strong comeback of corporate travel.”
Spohr said he was in close contact with pharmaceutical CEOs about the expansion of testing and was positive there would be action on this.
"I believe the government has understood how important aviation is for the German
economy, the most export-oriented economy in the world," he said.
He added that the airline was benefiting from its hub strategy. “This enables us to offer connections that would otherwise be uneconomical as point-to-point connections during this current market environment,” he said.
In the third quarter of 2020 the group’s airlines – Lufthansa, Swiss, Austrian and Brussels Airlines – carried 8.7 million passengers, 20 per cent of the previous year’s figure.
Capacity stood at 22 per cent of the previous year's level; the group said that in Q4, it would offer a maximum of 25 per cent of 2019’s capacity.
The airline group now has €10.1 billion in reserves available including stabilisation measures from governments in Germany, Switzerland, Austria and Belgium totalling €6.3 billion which have not yet been used. It expects operating cash drain to be limited to around €350 million per month and predicts a return to positive operating cash flow during the course of 2021.
The group has cut operating expenses by 43 per cent year on year, partly as a result of significantly lower fuel costs, fees and a reduction in other costs that vary based on the extent of flight operations. It has cut its workforce by 10 per cent since the same period in 2019.
"Strict cost savings and the expansion of our flight programme enabled us to significantly reduce the operating cash drain in the third quarter, compared to the previous quarter. We are determined to keep following this path," said Spohr.
"We want to return to a positive operating cash flow in the course of the coming year. In order to achieve this, we are advancing restructuring programmes throughout the group with the aim to make the Lufthansa Group sustainably more efficient in all areas."
The group says it has registered an impairment of €1.4 billion in its accounts for 110 aircraft or rights of use - largely Airbus A380s and A340-600s - that are not expected to resume operations.
"We are now at the beginning of a winter that will be hard and challenging for our industry. We are determined to use the inevitable restructuring to further expand our relative competitive advantage. We aspire to remain the leading European airline group following the end of the crisis," said Spohr.
He added: "People around the world have a great desire to travel again soon. Together with our partners, we are ready and will do everything we can to fulfil this desire as quickly as possible and with the highest health and safety standards. The important thing now is to ensure health protection and freedom of travel, for example by means of widespread rapid tests.”
In October, Lufthansa announced it was rolling out a continuous fare pricing initiative based on NDC.