Ralph Orlowski | Reuters
The German airline said on Wednesday a net loss of 2.1 billion euros (2.35 billion dollars) for the first three months of the year. This compared to a loss of 342 million euros over the same period the previous year.
It comes when the number of passengers fell by more than 26% in the first quarter, compared to a year ago.
Impairment losses contributed to the loss, as Lufthansa recorded an impairment charge of € 266 million on aircraft out of service. It also depreciated 100 million euros on the book value of its catering unit LSG North America and 57 million euros on the low cost airline Eurowings.
Wednesday’s results were originally scheduled for April 30, but were postponed due to uncertainty surrounding the Covid-19 pandemic.
“Global air traffic has practically stopped in recent months. This had an unprecedented impact on our quarterly results. Given the very slow recovery in demand, we now need to take far-reaching restructuring measures to remedy this, “said Carsten. Spohr, chairman of the board of directors of Lufthansa, said in a statement.
It looks like the second quarter will also be hit hard by the pandemic, as travel bans continue to hit airlines.
Lufthansa reported a 98.1% drop in passenger numbers in April compared to a year ago, while the number of passengers and cargo in May was also “significantly lower”. The group parked 700 of its 763 planes in April and May.
The airline has said it does not expect the current crisis to end before 2023, and expects 300 planes to remain stationed in 2021 and 200 in 2022.
“From mid-June, the airlines of the Lufthansa group will considerably extend their timetables to around 2,000 weekly connections to more than 130 destinations worldwide,” the company statement said.
“The goal is to make as many destinations accessible to vacationers and business travelers again. “
In an effort to cut costs, the German airline said it had cut the working hours of 87,000 employees and postponed or canceled some projects planned before the crisis.
In addition, Brussels Airlines and Austrian Airlines – which are part of the Lufthansa group – will reduce their fleets by 30% and 20% respectively, as well as their workforce by 25% and 20% respectively.
There will also be additional restructuring measures in other companies that are part of the broader Lufthansa group.
These measures come after an agreement with the German government for financial support. The company has agreed to cede up to 24 take-off slots to competitors at Frankfurt and Munich airports for 9 billion euros ($ 10.05 billion) in support of the German government.
As part of the deal, the German government will get a 20% stake in Lufthansa.
The airline’s shares have fallen more than 42% since the start of the year.