Category Archives: Lufthansa

Lufthansa and Vereinigung Cockpit agree on package of short-term crisis measures through the end of the year

Lufthansa made this announcement:

Pilots’ contributions through December: reduced top-up payments for short-time working compensation benefits, compensation adjustments, and reductions in pension benefits
In return, redundancies due to business operations (betriebsbedingte Kündigungen) in the second quarter 2021 at the earliest
Reconciliations of interests and social plans are still being negotiated
Agreement on long-term contributions by pilots urgently needed to limit the number of necessary redundancies

Lufthansa has concluded a short-term agreement with the pilots’ union Vereinigung Cockpit (VC) for initial measures to manage the coronavirus crisis. The measures apply to the pilots of Lufthansa, Lufthansa Cargo, Lufthansa Aviation Training and some of the Germanwings pilots.

Cost reductions through the end of 2020

The agreement includes cost reduction measures that will apply until the end of the year. Among other things, top-up payments for short-time working compensation benefits and employer contributions to the pension scheme will be reduced from September onwards. Collective wage increases negotiated for 2020 will be postponed until January 2021.

Redundancies due to business operations in the second quarter of 2021 at the earliest

Lufthansa will refrain from implementing redundancies due to business operations for the pilots of Lufthansa, Lufthansa Cargo, Lufthansa Aviation Training and certain of the Germanwings pilots until March 31, 2021. However, the significant overcapacity of pilots will last considerably beyond March 2021. The number of redundancies for operational reasons can therefore only be limited by concluding a long-term crisis agreement. In a long-term crisis package, the costs of the personnel surplus could, for example, be compensated for by a corresponding reduction in working hours and salary for the period of the crisis.

At the same time, Lufthansa has announced that for all German flight operations, it will refrain from hiring new pilots from outside the Group as long as there is an overcapacity of cockpit staff. This will also apply to the cockpit staffing of tourist-oriented flight operations – which will be open to pilots from Sun Express Deutschland and the German base of Brussels Airlines who flew tourist routes during the past few years.

Negotiations on the reconciliation of interests and on social plans will be continued with the respective cockpit staff representatives. This process is furthest along at Germanwings, where flight operations are not set to continue in light of the effects of the coronavirus pandemic.

The package of measures was approved by the Executive Board of Deutsche Lufthansa AG, the Air Transport Employers’ Association (Arbeitgeberverband Luftverkehr) and the VC committees and is effective immediately.

Reuters: Lufthansa reaches a deal with its flight attendants union

From Reuters:

“Cabin crew at Lufthansa have voted overwhelmingly in favor of a deal to stop pay rises and cut hours, the UFO trade union said on Saturday as the German airline battles to rein in losses due to the coronavirus pandemic.

Lufthansa reached the deal in June with UFO, which represents 22,000 cabin crew, to reap more than 500 million euros ($592.05 million) in savings from shorter hours and an equivalent cut in pay as well as a temporary reduction in pension contributions.”

Read the full article.

Lufthansa aircraft photo gallery:

Consequences of Coronavirus pandemic have a considerable impact on Lufthansa result

Lufthansa Group has made this announcement:

Adjusted EBIT declines to minus 1.7 billion euros in the second quarter despite significant cost reductions
Comprehensive “ReNew” restructuring programme to ensure global competitiveness after the crisis
Lufthansa Cargo with strong second quarter
Number of employees already reduced by 8,300 – redundancies no longer ruled out in Germany as well
Normalization of demand to pre-crisis level expected for 2024 at the earliest

The collapse in demand for air travel due to the Coronavirus pandemic led to an 80 percent drop in revenue for the Lufthansa Group in the second quarter to 1.9 billion euros (previous year: 9.6 billion euros). Most of the revenue (1.5 billion euros) was generated by Lufthansa Cargo and Lufthansa Technik.

The Lufthansa Group Adjusted EBIT in the quarter under review amounted to minus 1.7 billion euros (previous year: 754 million euros), despite extensive cost reductions. Operating expenses were reduced by 59 percent, primarily through the introduction of short-time working for large parts of the workforce and the cancellation of non-essential expenditures. However, these measures were only partially able to compensate for the decline in sales. The consolidated net income of Lufthansa Group for the months April to June amounted to minus 1.5 billion euros (previous year: 226 million euros).

The logistics division benefited from stable demand. The loss of cargo capacity in passenger aircraft (“bellies”) led to a significant increase in yields. Lufthansa Cargo’s Adjusted EBIT thus rose to 299 million euros (previous year: minus 9 million euros).

First half of 2020
In the entire first half of 2020, Lufthansa Group revenue fell by 52 percent to 8.3 billion euros (previous year: 17.4 billion euros). Adjusted EBIT amounted to minus 2.9 billion euros (previous year: 418 million euros) and EBIT to minus 3.5 billion euros (previous year: 417 million euros). The difference between the two figures is mainly due to depreciation on aircraft and aircraft usage rights amounting to 300 million euros, goodwill impairments totaling 157 million euros and the impairment of joint venture holdings in the MRO segment totaling 62 million euros.

In addition, the negative market value development of fuel cost hedging contracts had a negative impact of 782 million euros on the financial result in the first six months of the year. Compared with the first quarter, this effect decreased by 205 million euros. The Lufthansa Group net result for the first half of the year thus amounted to minus 3.6 billion euros (previous year: minus 116 million euros).

Traffic development in the second quarter of 2020
In the second quarter of 2020, the Lufthansa Group airlines carried 1.7 million passengers, 96 percent fewer than in the previous year. Capacity fell by 95 percent. The seat load factor was 56 percent, 27 percentage points below the previous year’s figure. Freight capacity offered fell by 54 percent due to a lack of capacity on passenger aircraft. The decline in freight kilometers sold was 47 percent. This reflects an increase in cargo load factor by 10 percentage points, to 71 percent.

Traffic development in the first half of 2020
In the first six months, the Lufthansa Group airlines carried a total of 23.5 million passengers, two thirds fewer than in the same period last year (minus 66 percent). Capacity decreased by 61 percent. The seat load factor fell by 9 percentage points to 72 percent in the period. Freight capacity offered fell by 36 percent and cargo kilometres sold by 32 percent. This resulted in an increase in cargo load factor by 4 percentage points to 66 percent.

Cash flow and liquidity development
Capital expenditure fell to 897 million euros (previous year: 1,904 million euros) in the first half of the year, mainly due to postponing planned aircraft deliveries, with only 127 million euros of capital expenditure in the second quarter. The drastic reduction in capital expenditure, the Group-wide focus on securing liquidity and strict working capital management limited the cash outflow despite the significant drop in earnings. The adjusted free cash flow for the first half of the year thus amounted to minus 510 million euros (previous year: 269 million euros). Net debt increased by 10 percent compared with the end of 2019, to 7.3 billion euros.

Centrally available liquidity amounted to 2.8 billion euros on June 30, a decrease of 1.4 billion euros compared with the end of the first quarter (31 March 2020: 4.2 billion euros).

The funds agreed with the Economic Stabilization Fund of the Federal Republic of Germany (WSF) to stabilize Lufthansa Group are not yet included in the liquidity figures as of 30 June 2020. Including these funds amounting to 9 billion euros, the Group had a total of 11.8 billion euros in liquidity available as of 30 June 2020.

Since the beginning of July, the Group has received 2.3 billion euros from the stabilization package. As a result of the capital increase, with which the WSF has acquired a 20 percent stake in the company’s share capital, the Lufthansa Group received cash of around 300 million euros. The release of the first instalment of the KfW (Kreditanstalt für Wiederaufbau) loan contributed one billion euros, and the establishment of the WSF’s Silent Participation II provided a further one billion euros.

Cash outflows since the balance sheet date related primarily to the payment of refund claims for cancelled flights. In July, the Group paid out just under one billion euros. In total, the Group has so far reimbursed around two billion euros to customers in the current year 2020.

Lufthansa Group decides on “ReNew” restructuring program
The Group currently expects demand for air travel to return to pre-crisis levels in 2024 at the earliest. Lufthansa Group has therefore decided on a comprehensive restructuring programme entitled “ReNew”, which also includes the restructuring program already underway at the airlines and service companies.

The aim remains to maintain the global competitiveness and future viability of the Lufthansa Group. The program includes the reduction of 22,000 full-time jobs in the Lufthansa Group. The Group’s fleet is to be permanently reduced by at least 100 aircraft. Nevertheless, the capacity offered in 2024 is to correspond to that of 2019. To this end, productivity is supposed to be increased by 15 percent by 2023, among other things by reducing the number of the flight operations (AOCs) to a maximum of ten in future. The size of the Executive and Management Boards of the Group companies will be reduced and the number of executives in the Group is supposed to be lowered by 20 percent. In the administration of Deutsche Lufthansa AG, 1,000 jobs will be cut. The sum of these measures should make it possible to refinance the funds of the stabilization package as quickly as possible. The financial planning of Lufthansa Group stipulates that positive cash flows will be generated again in the course of 2021. Lufthansa Group currently (as of 30 June 2020) has 129,400 employees, about 8,300 fewer than at the same time last year. The Group’s objective was to avoid redundancies as far as possible. Against the background of the market developments in global air traffic and based on the course of the negotiations on necessary agreements with the collective bargaining partners, this goal is no longer realistically within reach for Germany either.

Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG, said: “We are experiencing a caesura in global air traffic. We do not expect demand to return to pre-crisis levels before 2024. Especially for long-haul routes there will be no quick recovery.

We were able to counteract the effects of the coronavirus pandemic in the first half of the year with strict cost management as well as with the revenues from Lufthansa Technik and Lufthansa Cargo. And we are benefitting from the first signs of recovery on tourist routes, especially with our leisure travel offers of the Eurowings and Edelweiss brands. Nevertheless, we will not be spared a far-reaching restructuring of our business.

We are convinced that the entire aviation industry must adapt to a new normal. The pandemic offers our industry a unique opportunity to recalibrate: to question the status quo and, instead of striving for “growth at any price”, to create value in a sustainable and responsible way.”

Outlook
Since the beginning of July, the Group has further expanded its flight program. This primarily concerns short-haul leisure travel. Lufthansa Group had already made the expansion of its market position in this segment a focal point of its strategy before the Corona crisis. The airlines Eurowings and Edelweiss play an important role in this context.

In July, the Group gradually increased its offering to around 20 percent of the previous year’s level, with load factors of over 70 percent in European short-haul traffic.

In the third quarter, capacity offered is planned to increase to an average of around 40 percent of the prior year capacity on short- and medium-haul routes and to around 20 percent on long-haul routes. In the fourth quarter, capacity is planned to further increase to an average of around 55 percent (short- and medium-haul) and around 50 percent (long-haul). With this, the Group plans to return to 95 percent of the short- and medium-haul and 70 percent of the long-haul destinations by the end of the year. Thanks to a high degree of flexibility in supply and capacity planning, this figure can also vary at short notice.

Despite the capacity expansion, the Lufthansa Group also expects a clearly negative Adjusted EBIT in the second half of 2020 and thus a further significant decline in Adjusted EBIT for the full year. This reflects the expectation that important long-haul routes will continue to be served only to a very limited extent due to ongoing travel restrictions.

Lufthansa to add more flights from Munich

Lufthansa has made this announcement:

In the late summer season, Lufthansa will take off from Munich to five further European destinations. Beginning September 7, 2020, the airline will be returning to Marseille, Gothenburg, Kiev and Sibiu/Romania, and from October 5, 2020 to Graz.

Already, Lufthansa has significantly expanded its European services during the Bavarian summer holidays and added the Greek island of Rhodes to its flight schedule. In addition, the cities of Birmingham, Izmir, Tbilisi/Georgia and Cluj and Timisoara in Romania are again available non-stop from Munich. Furthermore, Luxembourg Airport will be operating flights once again from September 1, 2020. Therefore, by the end of October, Lufthansa’s Munich timetable will again include 86 destinations in Germany and Europe and 13 long-haul destinations.

Passenger safety is Lufthansa’s top priority, especially with regards to maximum hygiene on the ground and on board. The lufthansa.com website provides information on all hygiene measures that the airline has instituted, the adapted in-flight service, the current flight schedule and the flexible options for travel arrangements.

Lufthansa to fly to two additional sunny destinations in the Canary Islands

Lufthansa will be offering two new sunny destinations from Frankfurt: Gran Canaria and Tenerife.

Starting Saturday, October 3, 2020, Lufthansa will be operating to/from Tenerife with flight number LH1500/1501 and to/from Gran Canaria with flight number LH1502/1503. The flights to the Spanish Canary Islands will be operated on Saturdays and Sundays with an Airbus A320 family aircraft.

Summer flight schedule (3 – 24 October 2020), local times:

LH 1502 FRA 09:30 – 13:10 LPA
LH 1503 LPA 14:10 – 19:40 FRA
LH 1500 FRA 09:30 – 13:30 TFS
LH 1501 TFS 14:30 – 20:05 FRA

Winter flight schedule (25 October – 27 March 2020), local times:

LH 1502 FRA 09:30 – 13:10 LPA
LH 1503 LPA 14:10 – 19:50 FRA
LH 1500 FRA 09:15 – 13:15 TFS
LH 1501 TFS 14:15 – 20:00 FRA

Lufthansa continues to complement its attractive range of tourist destinations, which are to be gradually expanded. Aside from the existing expertise in the corporate sectors, the Lufthansa Group’s goal is to increase the tourism footprint in the private travel segment in the long term and to actively shape the future of tourism.

Lufthansa announces “ReNew” restructuring program, Germanwings will not return

Lufthansa has made this announcement:

The Executive Board of Deutsche Lufthansa AG has approved a second set of measures as part of its overall restructuring program in the wake of the coronavirus crisis. With the first set of measures launched in early April it had been decided, among other things, to reduce the fleet by 100 aircraft and not to resume the flight operations of Germanwings.

Following the approval by Lufthansa shareholders of the stabilization measures of the German federal government and the commitments made by the governments of Austria and Switzerland, the Group’s financing is currently secure.

However, the complete repayment of government loans and investments, including interest payments, will place an additional burden on the company in the coming years, making sustainable cost reductions inevitable for this reason as well.

The comprehensive restructuring program entitled “ReNew” is scheduled to run
until December 2023 and is headed by Dr. Detlef Kayser, Member of the Lufthansa Group Executive Board and responsible for Airline Resources & Operations
Standards. It also includes restructuring programs that are already underway at the Group’s airlines and service companies. These will continue unchanged.

In detail, the following resolutions were adopted by the Group Executive Board and communicated internally:

Following the downsizing of the Executive Board of Deutsche Lufthansa AG, the executive board and management bodies of the subsidiaries will be reduced in size compared with 2019. In a first step, the number of board members was reduced by one position each at Lufthansa Cargo AG, LSG Group, and Lufthansa Aviation Training.
Government loans and equity participations are to be reduced as quickly as possible to avoid a further increase in interest charges (restructuring program element “RePay”).
The number of leadership positions throughout the Group will be reduced by 20 percent.
The administration of Deutsche Lufthansa AG will be reduced by 1,000 positions.
The process of transforming Lufthansa Airline into a separate corporate entity is being accelerated.
The already planned reduction of sub-fleets and the bundling of flight operations will be implemented. This measure includes the long- and short-haul leisure business at the Frankfurt and Munich hubs. At Lufthansa alone, 22 aircraft have already been phased out ahead of schedule, including six Airbus A380, eleven Airbus A320 and five Boeing 747-400 aircraft.

The financial planning up to 2023 provides for the acceptance of a maximum of 80 new aircraft into the Lufthansa Group carriers’ fleets. This will reduce the investment volume for new aircraft by half.

Due to the long-term effects of the coronavirus pandemic, which are particularly serious for air travel, there is a calculated personnel surplus of at least 22,000 full-time positions in the companies of Lufthansa Group even in the period following the crisis. Nearly all airlines worldwide are currently affected by personnel surplus. In contrast to many of its competitors, Lufthansa will continue to avoid layoffs wherever possible. This requires agreements on crisis-related measures with unions and social partners representing the Lufthansa employees. So far, negotiations have only been successful with the UFO cabin union.

Germanwings

From Wikipedia:

Since 2016, Germanwings has been a wet lease operator for its sister company Eurowings. The Germanwings brand has not been used since then, although the IATA code “4U” continued to operate under the Eurowings brand until March 2018, when Germanwings’ own IATA-Code 4U was abandoned and replaced with the Eurowings designator EW. Germanwings was closed in April 2020.

On April 7, 2020, Lufthansa previously announced that it would be shutting down Germanwings, partly due to the large travel ban during the COVID-19 pandemic.

Germanwings aircraft photo gallery:

Germanwings aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=6m9CF6&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Ryanair to challenge Lufthansa bailout

Ryanair made this announcement:

Reacting to the European Commission’s approval on June 25, 2020 of the German Government’s €9 billion bailout of Lufthansa, Ryanair’s Michael O’Leary said:

“This is a spectacular case of a rich EU Member State ignoring the EU Treaties to the benefit of its national industry and the detriment of poorer countries. Under the pretext of COVID-19, the German Government is giving Lufthansa a bank-breaking bailout of €9 billion which even the airline’s own CEO admits it does not need.

In clear breach of European competition rules, Berlin is wasting vast amounts of taxpayers’ money to prop up an uncompetitive airline that should be putting its own house in order instead of once again running to the Government for help. This and other bailouts will have a more devastating long-term effect on the future of European aviation than the pandemic itself.

This bailout money will be used to bully smaller rivals out of the market, in line with Lufthansa’s grim record of anti-competitive behavior. Only last week, Italian press reported that Lufthansa’s Air Dolomiti was “teaming up against low-cost” with three other airlines, to introduce minimum prices. This follows reports that Austrian Airlines, also owned by Lufthansa, is gearing up to set a minimum airfare of €40.

In addition to coordinating a State-sponsored price-setting cartel, Lufthansa is threatening to shut down smaller national airlines within the Lufthansa group, as if they were its Belgian, Austrian and Swiss hostages, unless the respective governments pay a ransom.

The contrast between Lufthansa and Ryanair could not be starker. Instead of touring Europe’s capitals for taxpayer-funded hand-outs, Ryanair is innovating its way out of the crisis by giving consumers lower fares and connectivity at a time when Europe’s regions and cities desperately need the revival of tourism and their local economies.

We urge the European Commission to stand by its principles and keep the skies open, fair and competitive. If not, the single aviation market the EU has successfully built will crumble, with European consumers and taxpayers paying the price. The Commission’s approval of the Lufthansa bailout today is a betrayal of the core principles of EU law, which we have no alternative but to refer to the EU General Court.”

Lufthansa Group shareholders pave the way for stabilization measures

Lufthansa Group has made this announcement:

On June 25, the shareholders of Deutsche Lufthansa AG voted in favor of accepting the capital measures and the participation of the Economic Stabilization Fund (WSF) of the Federal Republic of Germany in Deutsche Lufthansa AG. The corresponding proposal received the necessary majority at today’s Extraordinary General Meeting of the company.

The package provides for stabilization measures and loans of up to 9 billion euros. The WSF will make silent capital contributions of up to 5.7 billion euros to the assets of Deutsche Lufthansa AG. It will also establish a 20 percent stake in the share capital of Deutsche Lufthansa AG by way of a capital increase. This capital increase was approved at today’s Extraordinary General Meeting. The shareholders also voted in favor of granting two conversion rights for parts of the silent capital contributions. These conversion rights are intended, on the one hand, to safeguard the Federal Government in case of a takeover of Lufthansa and, on the other hand, to secure the interest payments for the silent capital contribution. Both conversion rights can be transformed into a further five percent of the company’s share capital should these conditions be met. The package will be supplemented by a loan of up to 3 billion euros with the participation of KfW and private banks.

Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa AG says: “The decision of our shareholders provides Lufthansa with a perspective for a successful future. On behalf of our 138,000 employees, I would like to thank the German federal government and the governments of our other home countries for their willingness to stabilize us. We at Lufthansa are aware of our responsibility to pay back the up to 9 billion euros to the taxpayers as quickly as possible.”

As a result of the resolution of the Extraordinary General Meeting, the company’s liquidity is secured on a sustained basis. The companies of Lufthansa Group are working at full speed to get their operations up and running again. The airlines’ flight schedules will therefore be consistently expanded in the coming weeks. The flight schedule for the next few weeks will be published at the beginning of next week. The plan is to include 90 percent of all originally planned short-haul destinations and 70 percent of all long-haul destinations in the flight schedule again by September.

Around 30,000 shareholders attended the Extraordinary General Meeting. A total of 39.0 percent of the share capital was represented. Of these, 98 percent of the capital present voted to accept the company’s proposed resolution. This means that far more than the necessary two-thirds majority voted in favor of adoption.

The European Commission had already approved the stabilization package before the start of the Extraordinary General Meeting.

A decision on the approval of the stabilization measures in the other home markets of Lufthansa Group will be made in the near future.

In other news, Lufthansa and the Independent Flight Attendants’ Union (UFO) have agreed on June 24, on a package of measures amounting to more than half a billion euros to counter the economic effects of the crisis.

The package of measures includes the suspension of pay increases, a reduction in flying hours with a corresponding reduction in pay and temporary reductions in contributions to the company pension scheme.

Additionally, both parties have agreed on a package of voluntary measures and severance programs. These include unpaid leave, voluntary measures to further reduce working hours, and the subsidized, early transfer to a company pension scenario.

“This agreement is an important signal to our employees, our shareholders and today’s Extraordinary General Meeting. In this way, we want to avoid redundancies in Lufthansa cabins,” said Michael Niggemann, Executive Board Member Human Resources and Legal Affairs of Deutsche Lufthansa AG. “We also see this deal as a sign of a regained and constructive social partnership with the UFO.”

Nicoley Baublies, UFO chief negotiator, sums up: “The agreement that has now been reached for Lufthansa cabin staff provides the urgently needed job security. In the current crisis, such contributions, which imply security but also cuts for every cabin employee, will hopefully lead to a clear approval of the rescue package of the German government at today’s Annual General Meeting. The coming months will be very challenging for us as social partners. With this package and the other solutions that we have found together, we are finally placing our social partnership on a new and visible foundation.”

With the crisis package that has now been agreed upon, the company will be able to avoid layoffs for the 22,000 cabin staff of Deutsche Lufthansa AG during the crisis. The agreements reached still require the approval of the UFO members.

Lufthansa Group airlines significantly expands flight schedule until September

Lufthansa Group has made this announcement:

90 percent of short and medium-haul routes back on offer by September
70 percent of long-haul destinations back on offer by September
Further expansion of leisure destinations

The airlines in the Lufthansa Group are significantly expanding their services in the coming weeks and months. This applies to both short-haul and long-haul flights. The focus in expanding flight schedules is to again offer as many destinations as possible.

In September, for example, 90 percent of all originally planned short- and medium-haul destinations and 70 percent of long-haul destinations will be served again. Customers planning their autumn and winter holidays now have access to a comprehensive global network of connections via all hubs of the Group.

The core brand Lufthansa alone will be flying more than 100 times a week to destinations in North America via its hubs in Frankfurt and Munich in autumn. Around 90 flights a week are planned to Asia, over 20 to the Middle East and over 25 to Africa. In Africa, for example, there will again be flights to Windhoek and Nairobi, in the Middle East to Beirut and Riyadh, in North America to Houston, Boston and Vancouver, in Asia to Hong Kong and Singapore.

On short- and medium-haul routes, Lufthansa will offer a total of 1,800 weekly connections from September onwards. There will be 102 destinations from Frankfurt and 88 from Munich, including Malaga, Alicante, Valencia, Naples, Rhodes, Palermo, Faro, Madeira, Olbia, Dubrovnik, Reykjavik and many other summer destinations from Frankfurt.

Lufthansa expanded its service concept on June 1, 2020. Customers receive a disinfecting wipe before every flight. On short- and medium-haul flights in Business Class, the beverage service and the normal meal service will be reactivated. On long-haul flights, guests in all classes will again be offered the usual range of beverages. In First and Business Class, customers will once again be able to choose from a range of dishes. In Economy Class, customers will also continue to receive a meal. Strict hygiene regulations continue to be adhered to during the service adjustments.

From July onwards, Austrian Airlines aircraft will take off on regular long-haul flights for the first time since mid-March. Bangkok, Chicago, New York (Newark) and Washington will then be available with up to three weekly flights. The European network offer will also be expanded to include various routes from July onwards – including flights to Greece.

Swiss plans to return to about 85% of the destinations it served before the Coronavirus crisis in autumn, with about one-third of its capacity on these routes. As Switzerland’s airline, Swiss is committed to offering the widest possible range of services in the build-up phase. The initial focus here will be on European services from Zurich and Geneva. Further intercontinental destinations will also be reintroduced into the route network.

Eurowings is also significantly expanding its flight program for both business and leisure travelers and plans to fly to 80 per cent of its destinations again in the course of the summer. Following the lifting of the travel warning, interest in holiday destinations such as Italy, Spain, Greece and Croatia in particular is growing by leaps and bounds. This is why Eurowings will be putting 30 to 40 percent of its flight capacity back into the air in July – with the main focus on flights from Düsseldorf, Hamburg, Stuttgart and Cologne/Bonn.

When planning their trip, customers should take the current entry and quarantine regulations of the respective destinations into account. Throughout the entire trip, restrictions may be imposed due to stricter hygiene and safety regulations, for example, due to longer waiting times at airport security checkpoints.

From June 8 onwards, guests on all Lufthansa and Eurowings flights are obliged to wear a mouth and nose cover on board throughout the entire journey. This serves the safety of all passengers on board. The General Conditions of Carriage (GTC) will be amended accordingly. Lufthansa also recommends that passengers wear a mouth-nose cover during the entire journey, i.e. also before or after the flight at the airport, whenever the required minimum distance cannot be guaranteed without restriction.

Lufthansa aircraft photo gallery:

Drastic decline in air travel significantly affects Lufthansa Group’s quarterly result

Lufthansa Group concludes first quarter with adjusted EBIT of minus 1.2 billion euros
Fixed cost development in line with target of a reduction by one third given in March
Restructuring necessary to repay loans and deposits as quickly as possible
Capacity will increase from 3 percent of original planning in May to up to 40 percent in September

“Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent. In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this,” said Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa AG.

First quarter 2020

The company is reporting today on the results for the first quarter of 2020, the publication of which was originally scheduled for April 30 and had been postponed due to the effects of the corona crisis. The most important key figures have already been reported in an ad hoc release on April 23.

The travel restrictions imposed due to the global spread of the coronavirus have significantly impacted the Lufthansa Group’s earnings development in the first quarter of 2020. Group revenue in the first quarter fell by 18 per cent to 6.4 billion euros (previous year: 7.8 billion euros). Cost reductions could only partially offset the revenue decline in the quarter. Adjusted EBIT amounted to minus 1.2 billion euros in the first quarter of 2020 (prior year: minus EUR 336 million). Net profit amounted to minus 2.1 billion euros.

Crisis-related asset impairments and the negative development of the value of fuel hedges had a significant negative impact on net profit in the quarter. The Group recorded impairment charges of 266 million euros on decommissioned aircraft and 157 million euros on the goodwill of LSG North America (minus 100 million) and Eurowings (minus 57 million). The negative market value development of fuel cost hedges had a negative impact of 950 million euros on the financial result in the first three months of the year. 60 million related to hedges that expired in the first quarter and had a corresponding cash relevant negative impact on earnings. The remainder reflects the valuation of hedges expiring in the future as of March 31. Adjusted free cash flow amounted to 620 million euros. Compared with the end of 2019, the equity ratio fell by 6.7 percentage points to 17.3 percent and net debt by 5 percent to 6.4 billion euros. Pension provisions amounted to 7.0 billion euros. They were thus 5 percent higher than at the end of the year.

Traffic development

In total, the airlines in the Lufthansa Group carried 21.8 million passengers in the first three months, around a quarter less than in the same quarter last year (- 26.1 percent). The seat load factor fell by 4.7 percentage points to 73.3 per cent during this period. Freight capacity on offer fell by 15 percent and freight kilometers sold by 15.5 percent. This results in a cargo load factor of 62.5 percent, which is 0.4 percentage points lower.

In April, the Lufthansa Group airlines recorded a 98.1 percent year-on-year decline in passenger numbers to 241,000. Supply fell by 96.0 percent. The seat load factor fell by 35.8 percentage points to 47.5 percent. Freight supply was 60.7 percent lower than in April 2019, in particular due to a lack of capacity on passenger flights. By contrast, freight kilometers sold declined by only 53.1 percent, so that the cargo load factor rose by 11.5 percentage points to 71.5 percent. Passenger and freight volumes in May were again significantly lower than in the previous year.

Liquidity development

The state support measures secure the solvency of the company until it is able to generate sufficient funds from its own resources. On 31 March 2020, the Lufthansa Group’s liquidity amounted to around 4.3 billion euros.

“We have succeeded in reducing fixed costs by one third within a short period of time. Nevertheless, in our operating business we are currently consuming around 800 million euros of our liquidity reserve per month. In addition, the reimbursement of cancelled airline tickets and the repayment of financial liabilities that have fallen due will have a foreseeable negative impact on our liquidity development,” said Thorsten Dirks, Member of the Executive Board Digital and Finance at Deutsche Lufthansa AG.

Lufthansa Group initiates comprehensive restructuring

“In order to repay the loans and coupons quickly, we will have to significantly increase our annual free cash flow compared to pre-crisis levels – even though global demand for flights will remain below pre-crisis levels for years to come. This will only succeed if we implement restructuring programs in all areas of the Group and agree on innovative solutions with the unions and working councils,” says Thorsten Dirks.

The Lufthansa Group plans to significantly reduce unit costs compared with pre-crisis levels. Among other things, fixed costs have been reduced by short-time working for around 87,000 employees, the postponement or cancellation of planned projects and the postponement of maintenance events. In addition, ongoing restructuring programs at Austrian Airlines and Brussels Airlines are being further intensified. Brussels Airlines plans to reduce its fleet by 30 percent and its workforce by 25 percent. Austrian Airlines has decided to reduce its capacity in the long term by downsizing its fleet by 20 percent, and has agreed with the working councils to cut personnel costs by around 20 percent. Restructuring and cost-cutting programs will also be launched in other Lufthansa Group companies. Negotiations with aircraft manufacturers on extensive postponements of planned aircraft takeovers are continuing. In addition, the sale of individual non-core business units is being examined in the medium term.

Capacity development

The reduction in traffic performance by over 95 percent in the months of April and May resulted in the Group initially parking 700 of its 763 aircraft.

From mid-June, however, the Lufthansa Group’s airlines will be significantly expanding their schedules to around 2,000 weekly connections to more than 130 destinations worldwide. The aim is to make as many destinations accessible again for holidaymakers and business travellers. Yesterday the Executive Board decided to increase the offered capacity in September by up to 40 percent of the original schedule. At the same time, the number of destinations will increase to 70 percent of the original plan for long-haul flights and 90 percent for short-haul flights in order to offer customers the widest possible choice of destinations. To this end, a step-by-step expansion of the flight schedule is now being worked out over the next three months. In doing so, the company will accelerate the course it has already embarked on to expand its tourist offering.

The company is planning on only gradually increasing demand. It still expects 300 aircraft parked in 2021, and 200 in 2022. Even after the end of the crisis, which is expected to end in 2023, the Group expects its fleet to remain 100 aircraft smaller. A considerable decline in demand is also initially expected for the service companies’ third-party business.

The airlines in the Lufthansa Group have prepared themselves for rising demand with extensive hygiene measures and the introduction of mandatory masks on board. To give their customers maximum flexibility in the corona crisis, the Lufthansa Group airlines continue to offer their customers numerous rebooking options. In addition, capacities in the call centres are being continually expanded so that customers who cancel their flight can be reimbursed as quickly as possible. This should enable ticket refunds in the three-digit million range per month. Due to the high number of refund requests, waiting times may still occur.

Results Forecast

The uncertain further development of the corona pandemic continues to make it impossible to make a precise forecast of the earnings trend for 2020. The Lufthansa Group continues to expect a significant decline in Adjusted EBIT.

“Even in this unique crisis we are working hard to defend our leading position in Europe,” said Carsten Spohr.