Lufthansa CEO Carsten Spohr. Picture: REUTERS/Kai Pfaffenbach
Lufthansa CEO Carsten Spohr. Picture: REUTERS/Kai Pfaffenbach

Frankfurt — Deutsche Lufthansa is in talks with planemakers about swapping some orders for larger aircraft to smaller long-distance models, helping to adapt its fleet to an enduring slump in intercontinental business travel, as the coronavirus crisis upends demand.

Europe’s largest airline group is in negotiations with Airbus and Boeing about existing orders, with the manufacturers showing flexibility in the discussions, CEO Carsten Spohr said in a webinar on Monday as part of the London School of Economics German Symposium.

Spohr didn’t elaborate on the potential changes. He said he doubted whether demand for business travel in Europe and the US would ever return to pre-pandemic levels. Lufthansa previously said it was in talks about its plane backlog, without detailing its goals.

Planemakers have slashed production as airlines review their fleet needs while granting leeway over deliveries to help minimise cancellations. Airbus said in January that there would be no increase in build rates for its newest A350 wide-body in 2021, while Boeing is at risk of losing more than a third of orders for the coming 777X as delays give customers the right to walk away from contracts.

Shares of Lufthansa traded 0.4% lower as of 9.06am in Frankfurt on Tuesday. The stock has added 1.4% in 2021 after losing one-third of its value in 2020.

The German company has orders for 20 777Xs and 41 Airbus A350-900s. A total of 777 buyers are looking to seize on the programme delays to switch to smaller 787 Dreamliners, of which Lufthansa already has 20 on order. Airbus offers the A330neo as a smaller wide-body as well as new, longer-range versions of its single-aisle A321neo.

Representatives of Boeing and Airbus declined to comment.

Lufthansa has already moved to stand down many of its thirstiest four-engine wide-bodies, saying in 2020 it would retire the last Boeing 747-400s and that eight A380 superjumbos would only be reactivated in the event of a sharp market recovery.

“We are putting many four-engined long-range aircraft out of the fleet and this creates a certain need for smaller long-range aircraft,” said Spohr “These are very dynamic discussions.”

The CEO also said the airline is in fleet talks with Embraer SA, whose regional planes are operated at Lufthansa, Austrian and Air Dolomiti and compete with the Airbus A220 used by Swiss. He didn’t comment further on the discussions.

Bloomberg

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