The collapse in air passenger demand caused by the
coronavirus pandemic led the Lufthansa Group to a €1.7 billion loss in the
second quarter, with revenue down 80 per cent year on year.
According to the company’s earnings report, the group’s
airlines carried 1.7 million passengers in Q2 – a drop of 96 per cent on the
previous year. Capacity fell by 95 per cent, while the load factor was down 27
percentage points to 56 per cent. Despite freight operations propping up
revenues of €1.9 billion in the quarter, overall freight capacity fell 54 per
cent due to reduced passenger flights.
For the first half of the year to 30 June, the Lufthansa
Group’s revenue fell 52 per cent to €8.3 billion, leading to a €2.9 billion
loss compared to a €418 million profit in 2019.
The figures come despite efforts by the company to cut
costs, which yielded a 59 per cent reduction in operating costs owing largely
to the introduction of short-time working for a large portion of staff and the
cancellation of non-essential expenditure.
The Lufthansa Group announced in June that it would have to
cut up to 22,000 jobs as a result of the downturn. It has already reduced
staffing levels by 8,300 employees and initially hoped to avoid further redundancies
but now says further layoffs cannot be ruled out.
According to Lufthansa, the company held €2.8 billion in
available liquidity as of 30 June, though this figure does not include the €9
billion in emergency funding provided by the German government and approved by
shareholders at the end of June, from which it has only started receiving money since the beginning of July.
The Lufthansa Group said it does not expect passenger demand
to return to pre-pandemic levels until 2024 at the earliest. It has therefore
launched a comprehensive restructuring programme called “ReNew”, which includes
the previously announced redundancies and a permanent fleet reduction of at
least 100 aircraft. However, the group plans to offer the same capacity level
as 2019 in 2024.
ReNew also includes an increase in productivity by reducing
the number of Air Operator Certificates (AOCs) to a maximum of ten, a 20 per
cent reduction in the size of the executive and management boards, and 1,000
redundancies through the administration of Deutsche Lufthansa AG.
Chairman and CEO Carsten Spohr commented: “We are
experiencing a caesura in global air traffic. We do not expect demand to return
to pre-crisis levels before 2024. Especially for long-haul routes there will be
no quick recovery.
“We were able to counteract the effects of the coronavirus pandemic
in the first half of the year with strict cost management as well as with the
revenues from Lufthansa Technik and Lufthansa Cargo. And we are benefitting
from the first signs of recovery on tourist routes, especially with our leisure
travel offers of the Eurowings and Edelweiss brands. Nevertheless, we will not
be spared a far-reaching restructuring of our business.
“We are convinced that the entire aviation industry must
adapt to a new normal. The pandemic offers our industry a unique opportunity to
recalibrate: to question the status quo and, instead of striving for ‘growth at
any price’, to create value in a sustainable and responsible way.”