Fresh lockdown set to sap more fuel from Lufthansa’s tank
05 November 2020 - 10:35
byKirsti Knolle
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Berlin — Lufthansa warned on Thursday it will burn through more cash in the fourth quarter than in the third and that further restructuring measures will weigh on its results as it struggles to cope with the effects of the Covid-19 pandemic.
As a result of continuing travel restrictions to curb the virus outbreak, Germany’s flagship airline booked a net loss of €2bn in the third quarter, compared with a profit of €1.2bn the previous year.
Third-quarter capacity was just 22% of 2019’s level, leading to an average monthly operating cash drain of €200m.
As the airline expects even fewer passengers in the winter, it said that number would grow in October-December, though would not exceed €350m. It aims to return to a positive operating cash flow in the course of the coming year.
“We are now at the beginning of a winter that will be hard and challenging for our industry,” said CEO Carsten Spohr. “We are determined to use the inevitable restructuring to further expand our relative competitive advantage.”
Lufthansa and its subsidiaries Eurowings, Swiss, Austrian and Brussels Airlines are slashing their schedules, fleet and staff, with air travel not expected to recover to pre-pandemic levels before 2025.
The size of the expected restructuring costs will depend on negotiations with trade unions, Lufthansa said. The carrier aims to reduce 22,000 full-time jobs.
Operating expenses were down 43% in the third quarter from the previous year, helped by significantly lower fuel costs and fees. Sales fell to €2.7bn from €10.1bn.
The airline, which secured a €9bn state bailout in June, said it had liquidity of €10.1bn.
Lufthansa confirmed it aims to increase capacity to about 25% towards the end of the year.
Rival Ryanair has warned it might have to cut back its plans to fly 40% of 2019’s traffic levels in the winter. British Airways-owner IAG has predicted fourth-quarter capacity at 30% of 2019 levels.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Fresh lockdown set to sap more fuel from Lufthansa’s tank
Berlin — Lufthansa warned on Thursday it will burn through more cash in the fourth quarter than in the third and that further restructuring measures will weigh on its results as it struggles to cope with the effects of the Covid-19 pandemic.
As a result of continuing travel restrictions to curb the virus outbreak, Germany’s flagship airline booked a net loss of €2bn in the third quarter, compared with a profit of €1.2bn the previous year.
Third-quarter capacity was just 22% of 2019’s level, leading to an average monthly operating cash drain of €200m.
As the airline expects even fewer passengers in the winter, it said that number would grow in October-December, though would not exceed €350m. It aims to return to a positive operating cash flow in the course of the coming year.
“We are now at the beginning of a winter that will be hard and challenging for our industry,” said CEO Carsten Spohr. “We are determined to use the inevitable restructuring to further expand our relative competitive advantage.”
Lufthansa and its subsidiaries Eurowings, Swiss, Austrian and Brussels Airlines are slashing their schedules, fleet and staff, with air travel not expected to recover to pre-pandemic levels before 2025.
The size of the expected restructuring costs will depend on negotiations with trade unions, Lufthansa said. The carrier aims to reduce 22,000 full-time jobs.
Operating expenses were down 43% in the third quarter from the previous year, helped by significantly lower fuel costs and fees. Sales fell to €2.7bn from €10.1bn.
The airline, which secured a €9bn state bailout in June, said it had liquidity of €10.1bn.
Lufthansa confirmed it aims to increase capacity to about 25% towards the end of the year.
Rival Ryanair has warned it might have to cut back its plans to fly 40% of 2019’s traffic levels in the winter. British Airways-owner IAG has predicted fourth-quarter capacity at 30% of 2019 levels.
Reuters
England’s overseas travel ban a new blow to airlines
Aviation: Taking off ... but clouded in uncertainty
Air France-KLM in critical talks for future as a combined venture
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
British Airways owner IAG cuts more flights after €1.3bn quarterly loss
Japan’s ANA airline said to get nearly $4bn loan to offset effects of Covid-19
Delta pushes back target for plugging its cash bleed
The worst is yet to come for the world’s airlines
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.