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Lufthansa Downsizes Operations Due To Massive Losses

Lufthansa Group’s revenue in the second quarter underwent an 80% drop due to low demand for air travel, Breaking Travel News reported. The airline group acquired only €1.9 billion over the past three months, down from €9.6 billion in the same period last year. Most of the revenue (about €1.5 billion) was obtained by Lufthansa Cargo and Lufthansa Technik.

Lufthansa Group adjusted EBIT (earnings before interest and taxes) for the quarter was – €1.7 billion from €754 million last year, despite substantial cost reductions. Operating expenses were reduced by 59%, mainly through establishing short-time working for major parts of the workforce and the cancellation of non-essential expenditure. The logistics division benefited from stable demand.

Capacity decreased by 61%, as revenue fell

Carsten Spohr, chief executive of Deutsche Lufthansa, said: “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.”

lufthansa

In the second quarter, Lufthansa airlines served 1.7 million passengers, 96% less than the previous year. In the first half of 2020, group revenue fell by 52% to €8.3 billion, while a total loss of €2.9 billion was reported. Over the same period, the airline group flew 23.5 million passengers, two thirds fewer than in the same period last year. 

The airline has introduced a restructuring program

The work includes laying off of 22,000 full-time jobs across the Lufthansa Group, while 100 aircraft will also permanently leave the fleet. Even so, Lufthansa is hoping to see an increase in productivity by 15% by 2023, by reducing the number of air operators’ certificates to a maximum of ten, among other things. The executive and management boards will also be reduced in size. The number of executives in the group will be lowered by 20%.

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