Picture used for illustrative purpose.
Lufthansa may permanently ground more jets to emerge leaner from the coronavirus pandemic, the German airline group said, as it reported a record 6.7 billion euro ($8.10 billion) loss for 2020.
The group, which also owns Austrian Airlines, Swiss and Eurowings, trimmed its 2021 capacity plans as COVID-19 disruption drags on, but held out hope for a summer upturn.
“We are examining whether all aircraft older than 25 years will remain on the ground permanently,” Chief Executive Carsten Spohr said, pledging to make 2021 “a year of redimensioning and modernisation” for the company.
He also confirmed the expected retirement of Lufthansa’s eight remaining Airbus A380 superjumbos - a younger but fuel-thirsty model that is harder to fill in a downturn.
Lufthansa reported a 1.14 billion-euro ($1.38 billion) fourth-quarter net loss with a 1.29 billion deficit in adjusted earnings before interest and tax (EBIT). Revenue fell 71% to 2.59 billion euros.
Its shares were down 2.3% at 12.49 euros as of 1230 GMT in Frankfurt, after gaining nearly 15% since the start of the year on recovery hopes.
Bernstein analyst Daniel Roeska said that despite “tangible progress” on cost-cutting at its airline subsidiaries, “Lufthansa mainline is still stuck at step one” with short-term crisis union agreements. “More needs to happen - and faster,” Roeska said.
Lufthansa cut its global workforce by 20% to 110,000 in 2020 and is seeking to eliminate another 10,000 German jobs or equivalent wage costs.
The group, which received a government-backed 9 billion euro bailout last June, said it will operate at 40-50% of pre-crisis capacity this year, lowering its earlier 40-60% ambition.
Summer travel will nonetheless pick up swiftly whenever restrictions are eased, Spohr said, and Lufthansa stands ready to restore 70% of its schedule “in the short term”.
The group’s full-year net loss of 6.73 billion euros was on 13.59 billion euros in revenue, down 63%.
The company predicted a narrower 2021 EBIT loss than last year’s 5.45 billion euros.
German business morale fell to its lowest level since November 2014 in June, a survey showed on Monday, adding weight to expectations that Europe’s largest economy contracted in the second quarter.
German industrial activity is sluggish and recent data point to slower growth in the service sector, the German Economy Ministry said, adding this suggested Europe’s largest economy would experience a weak general economic trend.
Germany’s spluttering economy returned to growth in the first quarter as consumers spent more freely and construction activity picked up, but the government said the outlook remained clouded by trade disputes. Gross domestic product (GDP) rose 0.4% quarter-on-quarter,
Brent crude futures for June declined 29 cents, or 0.4%, to $66.28 a barrel at 06:45 GMT while US West Texas Intermediate (WTI) crude futures for June fell 34 cents, or 0.5%, to $62.33 a barrel.
Spot gold was up 0.5% to $1,786.80 per ounce at 06:57 GMT while US gold futures gained 0.5% to $1,786.90 per ounce.
Sheikh Fahim Bin Sultan Al Qasimi, Chairman of the Department of Government Relations in Sharjah, stated that the department has enhanced the stature of the UAE, in general, and Sharjah, in particular,