Lufthansa Group reports €5.5bn operating loss

posted on 4th March 2021 by Eddie Saunders
Lufthansa Group reports €5.5bn operating loss

By Edward Robertson

The Lufthansa Group has reported an operating loss of €5.5 billion but is anticipating strong growth in demand this year.

The group, which consists of Lufthansa, Swiss, Austrian Airlines and Brussels Airlines, saw revenues drop from €36.4 billion in 2019 to €13.6 billion in 2020 with an operating cash drain in Q4 2020 of around €300 million a month.

This was despite a number of factors being introduced to cut costs during the Covid-19 pandemic, including a 20 per cent cut in staff numbers to 110,000, crisis agreements with social partners and short-time working.

As a result, the group offered 31 per cent of flights and capacity ain available seat kilometres (ASK) while the 36.4 million passengers flown   in the year was 25 per cent of the 2019 total.

This led to an overall load factor of 63 per cent, 19.3 percentage points lower than in 2019 while cargo capacity was down by 39 per cent.

Deutsche Lufthansa AG CEO Carsten Spohr said: “The past year was the most challenging in the history of our company – for our customers, our employees and our shareholders. Travel restrictions and quarantine have led to a unique slump in demand for air travel.

“Now internationally recognised, digital vaccination and test certificates must replace travel bans and quarantine so people can once again visit family and friends, meet business partners or learn about other countries and cultures.”

Despite the future looking brighter, Deutsche Lufthansa AG chief financial officer Remco Steenbergen added a further 10,000 jobs in Germany could still be at risk while the group’s fleet is set to be reduced to 650 aircraft in 2023.

He is also considering the further disposal of subsidiary companies the offer only minor synergies with the core business.

Steenbergen said: “Thanks to our recent financing measures, we have sufficient liquidity to withstand a market environment that remains difficult.

“The next step is to strengthen our balance sheet and reduce debt. In doing so, we will reduce our costs through successful restructuring. Our crisis and cost management has taken effect much faster than originally planned.

“At the same time, our business has recovered more slowly than we had initially hoped. In addition to repaying the government stabilization funds, the goal of our financial strategy is for the financial markets to re-evaluate our creditworthiness to investment grade in the medium term.”