SAS reports its traffic was down 78.7% in October

Scandinavian Airlines-SAS has made this announcement:

The ongoing pandemic continues to severely impact SAS and reported traffic figures for October are broadly in line with September this year.

During October, SAS carried just over 0.6 million passengers, down 78.7% compared to last year. Similarly, SAS reduced its capacity by 73.3% year-over-year. Compared to the previous month, demand, capacity and load factor remained broadly unchanged.

“Reported traffic is close to what we experienced in September and demand continues to be stronger for domestic than for European and Intercontinental travel, which is also reflected in the network and schedule we offer. Regretfully, the accelerated number of COVID-19 cases in October have led to reinforced restrictions across Europe, which naturally impacts the willingness to travel negatively. Even though we expect the low demand environment to be maintained for the next few months, our view remains firm that the ramp-up phase for the airline industry will continue until 2022 with demand returning to levels before the pandemic a few years thereafter” says Rickard Gustafson, CEO SAS.

SAS scheduled traffic	Oct20	Change¹	Nov19-Oct20	Change¹
ASK (Mill.)	1 224	-72.3%	22 357	-53.9%
RPK (Mill.)	457	-86.3%	13 259	-63.0%
Passenger load factor	37.3%	-37.9 p u	59.3%	-14.6 p u
No. of passengers (000)	593	-78.3%	12 315	-56.7%

Geographical development, schedule	Oct20 vs. Oct19		Nov19-Oct20 vs. Nov18-Oct19
	RPK	ASK	RPK	ASK
Intercontinental	-97.1%	-81.4%	-69.6%	-59.8%
Europe/Intrascandinavia	-88.2%	-78.6%	-64.8%	-57.6%
Domestic	-56.3%	-38.7%	-42.3%	-31.4%

SAS charter traffic	Oct20	Change¹	Nov19-Oct20	Change¹
ASK (Mill.)	29	-89.6%	1 008	-74.1%
RPK (Mill.)	24	-90.9%	867	-75.6%
Load factor	82.8%	-11.2 p u	86.0%	-5.0 p u
No. of passengers (000)	10	-89.4%	295	-77.5%

SAS total traffic (scheduled and charter)	Oct20	Change¹	Nov19-Oct20	Change¹
ASK (Mill.)	1 253	-73.3%	23 365	-55.4%
RPK (Mill.)	481	-86.6%	14 127	-64.1%
Load factor	38.4%	-37.9 p u	60.5%	-14.7 p u
No. of passengers (000)	602	-78.7%	12 610	-57.6%

¹ Change compared to same period last year. p u = percentage units

Preliminary yield and PASK	Oct20	Nominal change	FX adjusted change
Yield, SEK	1,18	14,5%	20,7%
PASK, SEK	0,44	-43,2%	-40,1%

			Oct20
Punctuality (arrival 15 min)			91.7%
Regularity			99.3%
Change in total CO₂emissions, rolling 12 months			-57.2%
Change in CO₂emissions per available seat kilometer			-5.3%
Carbon offsetting of passenger related emissions			42%

Definitions:

RPK – Revenue passenger kilometers
ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)
PASK – Passenger revenues/ASK (scheduled)
Change in CO₂emissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl. non-revenue and EuroBonus), rolling 12 months
Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel)

From fiscal year 2020 we report change in CO₂ emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO₂ emissions by 25% by 2025, compared to 2005.

SAS aircraft photo gallery:

Emirates Airbus A380 touches down in Amman

Emirates Airline has made this announcement:

Emirates’ iconic flagship Airbus A380 landed at Queen Alia International (AMM) yesterday afternoon as the airline resumed the operations of its popular aircraft to Amman.

Customers can fly the Emirates A380 between Dubai and Amman three times a week on Wednesdays, Thursday and Fridays as part of the airline’s newly introduced expanded schedule of 10 weekly flights. The expanded schedule also includes flights EK 905 and EK 906. Emirates flight EK 905 departs Dubai at 22:15 and arrives in Amman at 23:40 local time. The return flight, EK 906 departs Amman at 01:45 and arrives in Dubai at 06:40 local time.

Timings have been scheduled to facilitate more effective onward connections to destinations in the United States such as well as vital connections to European points popular with Jordanian travelers.

Emirates aircraft photo gallery:

Air France to start operating flights to the brand new Berlin-Brandenburg Willy Brandt International Airport (BER)

Air France has made this announcement:

On November 8, 2020, Air France will start operating flights to the brand new Berlin-Brandenburg Willy Brandt International Airport (BER). Flight AF1434 operated by Airbus A319 will take off from Paris-Charles de Gaulle at 7:30 a.m., with a scheduled arrival in Berlin at 9:10 a.m. (local time).

At Berlin-Brandenburg, the airline’s customers will be welcomed at Terminal 1. Eligible passengers will have access to Skypriority, the airline’s service offering priority check-in, boarding and baggage delivery on arrival. They will also have access to the airport’s lounges.

This winter, customers will have access to up to 5 flights between the two airports, linking Berlin to the Air France hub at Paris-Charles de Gaulle which operates flights to close to 170 destinations worldwide.

End of operations at Berlin-Tegel airport

By transferring all its flights to Berlin-Brandenburg Willy Brandt airport, Air France will cease all operations to and from the historic German airport Berlin-Tegel. In 1960, it was the first airline to land a commercial flight at Berlin-Tegel. On 8 November 2020, it will also be the very last airline to take off from this airport before its final closure. Flight AF1235, operated by Airbus A321, will take off at 3:00 p.m., arriving at Paris-Charles de Gaulle at 4:50 p.m. (local time). To celebrate the event, customers on this last flight will enjoy special surprises.
The history of Air France at Berlin-Tegel

2 January 1960: For the first time, a commercial flight operated by Lockheed Constellation landed at Berlin-Tegel after a stopover in Frankfurt. Air France launched regular operations to the airport, which until then had only been used for military purposes.

1961: The Caravelle operated all flights to Berlin-Tegel.

1976: The supersonic aircraft Concorde landed at Tegel – even before the start of its scheduled service. 60,000 visitors flocked to the airport.

1977: Air France operated the Paris-Düsseldorf-Berlin route twice a day by Boeing B727-200 (154 seats) – replacing the smaller Caravelle.

1980: Air France celebrated the 30th anniversary of its network in Germany and the 5,000,000th passenger on routes to and from Berlin.

18 April 1988: Air France’s Airbus A320 celebrates its world premiere on the Paris-Berlin route.

November 1988: Start of the first of the 100 weekly flights of the new airline “EuroBerlin France” from Tegel to Frankfurt, Cologne, Munich and Stuttgart. The airline was 51% owned by Air France and 49% by Deutsche Lufthansa, and was based at Berlin-Tegel.

1st December 2017, the Air France subsidiary Joon started operations between Paris-Charles de Gaulle and Berlin-Tegel up to six times a day. With the suspension of Joon in 2019, Air France once again started operating the route itself.

2020: Until the start of the Coronavirus pandemic, Air France operated up to six daily services between Paris Charles de Gaulle and Berlin-Tegel. Air France has maintained these services even during the Coronavirus pandemic, with up to 21 weekly flights between Paris Charles de Gaulle and Berlin-Tegel.

8 November 2020: Air France operates up to five daily flights between the new Berlin-Brandenburg Airport (BER) and Paris-Charles de Gaulle. Passengers have access to Air France’s global network of some 170 destinations worldwide.

Eurowings takes off for the first time at the new Berlin Airport

Eurowings made this announcement:

Eurowings took off for the first time at the new capital city airport Berlin Brandenburg – three times in a row: on the morning of November 4 at 6.20 a.m., flights EW8058 to Cologne and EW8000 to Stuttgart took off. This was immediately followed by flight EW8040 to Düsseldorf at 6.30 a.m. This makes Eurowings the first airline in the Lufthansa Group to operate scheduled flights from the new capital city airport.

In domestic traffic, Eurowings currently connects the destinations Cologne, Düsseldorf and Stuttgart with the capital at least three times a day – on many days even more frequently. Despite a reduced flight schedule as a result of Corona, the airline is focusing on the off-peak hours, which are popular with travelers. The domestic German program is supplemented by weekly flights to the Canary Islands and the Greek Islands. Eurowings plans to gradually expand the BER program in line with market conditions from spring 2021 onwards.

Aircraft from Eurowings will preferably be positioned at the Pier North of the new Capital City Airport. Passengers will benefit from short distances, boarding without bus transfers and a direct building connection to the Lufthansa Lounge.

As a result of the coronavirus pandemic, Brussels Airlines reports an adjusted EBIT loss of EUR 233 million in the first nine months of the year

Brussels Airlines made this announcement:

In the first three quarters of the year, Brussels Airlines recorded a loss of EUR 233 million, due to the unprecedented impact of the coronavirus on travel demand. Revenue fell by 70% to EUR 339 million compared to last year. Brussels Airlines transported 73% fewer passengers between January and September and the seat load factor dropped by 11.4 percentage points to 70.6%. Next to the structural review of its overall cost position, Brussels Airlines accelerates the implementation of its restructuring programme Reboot Plus through various short- and long term measures to reduce variable and fixed costs to counter the effects of the coronavirus crisis.

The coronavirus has a dramatic impact on aviation worldwide. Brussels Airlines adjusted its flight schedule to the collapsed travel demand and the different travel restrictions, leading to a twelve-week flight suspension in spring and a reduced flight schedule during summer. The airline resumed its flight operations to Africa in July, re-establishing the important travel link between Europe and the African continent.

After the restart in June, the summer months were stronger than anticipated, with leisure demand picking up. This led to an increased offer to touristic destinations in July and August. Due to the rapidly changing travel restrictions and demand, however, Brussels Airlines needed to adapt its flight capacity in the most flexible way after the summer, to make sure that the capacity offered is as close as possible to the market demand in order to safeguard its cash position. Thanks to this very proactive and restrictive capacity management, Brussels Airlines was able to maintain cash-positive flight operations every week since its restart on 15 June.

As a result of the collapse of demand and capacity, the airline reports an Adjusted EBIT of EUR -233 million for the first nine months of the financial year (previous year: EUR 1 million). The EBIT reached EUR -256 million (previous year: EUR 0 million). The difference with the Adjusted EBIT stems mainly from write-downs of EUR 23 million on right-of-use assets for two Airbus A330-200 and eight Airbus A319 for the necessary fleet resizing.

Revenues were down by 70%, from EUR 1.137 million to EUR 339 million. Brussels Airlines transported 2,107,954 passengers between January and September, compared to 7,905,953 last year (-73%). 18,757 flights have been operated, a 70% decline compared to the 62,683 flights in the first three quarters of 2019. The seat load factor dropped 11.4 percentage points from 82% to 70.6%. Operating expenses decreased by 49% to EUR 607 million, primarily due to the volume-related decline in the cost of materials and services.

The coronavirus outbreak urged Brussels Airlines to intensify and accelerate its existing turnaround programme, which was launched in the third quarter of 2019 and which will now be implemented for 90% by the end of 2020. Following the adaptation of its network, the new plan Reboot Plus will reduce the fleet by 30% and the workforce by 25%. The turnaround programme, which has been agreed upon with the social partners and is in full implementation, will create the basis for a sustainable future for the company. At the end of September 2020, the number of employees already dropped by 14% compared to 2019.

Due to the still volatile and highly unpredictable situation worldwide, it is not possible to make any forecast for 2020 as a whole.

“We continue to focus on the timely implementation of our Reboot Plus plan in 2020, in order to start 2021 as a leaner Brussels Airlines. On the commercial side, contrary to many European competitors, we will continue our strict capacity management to ensure cash-positive operations. As travel restrictions, quarantines and complexity continue to put a heavy burden on travel demand, we plead for a Europe-wide approach for travel regulations in combination with a comprehensive quick testing approach as part of the travel journey. As a first step in this direction, we are working on trials with rapid COVID-19 antigen tests soon on specific flights.”

Dieter Vranckx, CEO Brussels Airlines

Coronavirus crisis continues to severely impact earnings at Swiss

Swiss made this announcement:

The actions being taken in response to the worldwide coronavirus pandemic continue to weigh heavily on the global aviation sector, including Swiss International Air Lines (SWISS). The company reports total revenues for the first nine months of 2020 of CHF 1.54 billion, a 61.8 percent decline on the same period last year (1^st to 3^rdquarter 2019: CHF 4.02 billion¹⁾). The operating loss increased to CHF 414.7 million (1^st to 3^rd quarter 2019: + CHF 489.6 million). Thanks to sizeable cost reductions and an increase in production in the summer months, the operating loss for the third-quarter period was lower than it had been in the second quarter. But with growing travel restrictions and the pandemic’s current rapid spread, SWISS will be further reducing its capacities in its 2020/21 winter schedules. The operating loss is expected to further increase by the end of the year. Stable and standardized parameters are now urgently required to restore confidence in travel.

The actions being taken in response to the coronavirus pandemic continued to impact substantially on global aviation and thus also on Swiss International Air Lines (SWISS) in the 2020 third-quarter period. SWISS was able to gradually restore services – to an extent beyond initial expectations – in the summer months. But growing travel restrictions thwarted the nascent revival in demand from mid-August onwards. Total revenues for the first nine months of 2020 amounted to CHF 1.54 billion, a 61.8-per-cent decline on the CHF 4.02 billion¹⁾of the prior-year period. The operating loss further increased, and amounted to CHF 414.7 million for the first nine months (compared to an operating profit of CHF 489.6 million for the prior-year period).

“Given the paralyzing effect that the various quarantine provisions have had on our customers’ booking behaviour over the past few months, this nine-month operating result is in line with our expectations,” says Markus Binkert, SWISS’s Chief Financial Officer. “With rigorous cash and cost management, we were able to minimize the cash drain in the third-quarter period. And despite the extremely difficult market environment, we are on course in bank loan terms, and our liquidity is not at risk.”

In view of the recent global increases in coronavirus cases and the associated tightening of travel restrictions worldwide, demand for air travel will further decline in the fourth quarter of this year. As a result, SWISS’s operating losses in 2020 are likely to further increase, and for the first time in 15 years the company will report a negative annual earnings result.

Further cost reductions in the winter timetable period

SWISS has launched a comprehensive restructuring programme to ensure that it can repay its state-backed bank loans as swiftly as possible and can secure its future viability and competitive credentials. The actions being taken here include deferring all projects and investments companywide that are not essential to business operations. SWISS is also pursuing three socially reasonable courses of action to reduce its personnel costs: a freeze on new hirings, attractive part-time employment models with associated salary reductions and early retirement options. In combination with natural workforce turnover, these should reduce the SWISS payroll by some 1,000 positions over the next two years. The company is also discussing these and further cost reduction measures with its social partners. In a further effort to lower costs, SWISS has also resolved to temporarily withdraw its 28 older Airbus A320 family aircraft for the winter timetable period. The company’s short- and medium-haul winter schedules will be operated solely with its more efficient Airbus A220 fleet and its new-engine-option or “neo” Airbus A320 and A321 aircraft.

Brief recovery in the third-quarter period

Having gradually restored services from June onwards, SWISS also saw an upturn in the demand for air travel, especially to tourist destinations and in the visiting-friends-and-relatives segment. As a result, the airline was able to operate up to 40 per cent of its originally planned programme in the summer months, which was slightly above expectations.

Growing and ever-changing travel restrictions and quarantine regulations extinguished this nascent revival, however, from mid-August onwards. As a result of the expanded production and substantial cost reductions, SWISS’s operating loss for the third-quarter period was lower than the second quarter’s at CHF 148.3 million (Q3 2019: operating profit of CHF 244.3 million). Total third-quarter revenues amounted to CHF 370.5 million (Q3 2019: CHF 1.45 billion¹⁾).

Drastic decline in nine-month passenger numbers

SWISS²⁾ transported a total of 4,315,992 passengers in the first nine months of 2020, some 69.8 per cent fewer than it had carried in the same period last year. A total of 41,294 flights were performed in the period, 64.1 per cent fewer than in January-to-September 2019. Nine-month systemwide capacity was 63.2 per cent down in available seat-kilometre (ASK) terms, while total traffic volume, measured in revenue passenger-kilometres (RPKs), saw a 71.9-per-cent decline. Nine-month systemwide seat load factor stood at 64.2 per cent, 20 percentage points below its prior-year level.

SWISS’s passenger volumes were 77.2 per cent down in July, 76.7 per cent down in August and 84.0 per cent down in September. Systemwide seat load factor for the third-quarter period stood at 43.0 per cent. Third-quarter seat load factor amounted to 71.5 per cent for European services, but was substantially lower for long-haul services to and from all traffic regions.

Demand for cargo services remained high. By the end of September, SWISS’s Swiss WorldCargo division had performed over 880 cargo-only flights and transported more than 18,000 tonnes.

Sizeable range of long-haul services thanks to high cargo demand

Keeping Switzerland connected with Europe and the rest of the world remains SWISS’s paramount objective. But a host of travel restrictions and quarantine provisions and a coronavirus pandemic that is raging more strongly than ever are making this increasingly difficult to do. As a result, SWISS’s originally planned flight schedules for the coming winter have had to be substantially downwardly revised. The company currently expects to offer services that amount to 25 per cent at the most of its prior-year capacity.

Thanks primarily to continuing strong demand for cargo services, however, SWISS is able to offer a comparatively wide range of long-haul flights. Since the start of the winter timetable period at the end of October, the company has been serving 16 of its 24 established long-haul destinations, and two more will be added in March. As a result, SWISS is serving a disproportionately large number of long-haul destinations (compared to its sister Lufthansa Group airlines) from its Zurich hub, albeit with fewer frequencies than originally planned.

“We will continue to do everything in our power to perform our mission of keeping Switzerland optimally connected with the world and providing our customers with a safe travel experience,” confirms SWISS CEO Thomas Klühr. “We are unlikely to see a recovery in the air transport sector until this pandemic subsides and the present immigration bans and quarantine requirements are lifted. But if the next summer timetable period is to bring the kind of upturn we desire, we must have parameters in place by then that are stable, standardized and favourable to mobility.”

Deteriorating trend due to Coronavirus puts pressure on third quarter results of Austrian Airlines

Austrian Airlines issued this statement:

• 3rd quarter of 2020: Adjusted EBIT of minus EUR 106 million
• CFO Andreas Otto: “The coronavirus really spoiled the summer business for us”
• Rising infection rates require cutback in flight operations

As a consequence of the second wave of the coronavirus crisis and the related high number of adjustments to flight operations, Austrian Airlines reported adjusted earnings before interest and taxes (adjusted EBIT) of minus EUR 106 million in the third quarter of 2020 compared to the positive results of EUR 70 million in the prior-year quarter. Accordingly, the adjusted EBIT for the first nine months of 2020 equaled minus EUR 341 million. The number of passengers transported by Austrian Airlines fell by 75 percent to about 2.8 million due to the many travel restrictions which have been imposed.

“As an airline, we normally make money in the summer months. However, this year the coronavirus spoiled things for us. The patchwork set of regulations within Europe and the new lockdown decrees in many countries are further aggravating the situation”, explains Austrian Airlines CFO Andreas Otto.

Results in detail

In the middle of August, Austrian Airlines operated at its highest capacity in the year 2020, comprising about 30 percent of flight operations compared to the prior-year level. The situation has deteriorated since this time as a result of the large number of travel restrictions. Revenue in the period July to September 2020 fell by 85 percent year-on-year to EUR 93 million. In the same period, the adjusted total operating revenue also declined by 85 percent from the third quarter of 2019 to EUR 102 million (Q3 2019: EUR 667 million). Operating expenditures amounted to EUR 208 million, corresponding to a drop of 65 percent (Q3 2019: EUR 597 million). The adjusted third-quarter EBIT amounted to minus EUR 106 million.

Revenue in the first nine months of 2020 was down by 85 percent to EUR 414 million (Q1-3 2019: EUR 1,612 million). The adjusted total operating revenue decreased by 72 percent to EUR 465 million (Q1-3 2019: EUR 1,678 million). Operating expenditures in the first three quarters of 2020 were down 51 percent to EUR 806 million (Q1-3 2019: EUR 1,661 million). Corresponding countermeasures have been taken, as reflected in the expansion of short time working at Austrian Airlines as well as comprehensive cost reduction measures. The adjusted EBIT, which does not include valuation losses or gains from aircraft sales, equaled minus EUR 341 million in the first nine months of the year (Q1-3 2019: EUR 17 million). EBIT in this period amounted to minus EUR 404 million. Nevertheless, cumulative EBIT and liquidity are still above business plan.

Current development of bookings and capacity utilization
The intensification of measures to combat the coronavirus also makes it more difficult for Austrian Airlines to plan daily flight operations. The so-called “lockdown light” imposed by the Austrian government for the time being for the period November 3 – November 30, 2020 leads the airline to expect a further drop in demand. At present the red-white-red flag carrier has reduced flight operations to about 20 percent of its comparable offering in the previous year, far less than originally planned for the winter months. Further flight plan adjustments are under preparation. The accumulated capacity utilization (passenger load factor) in the first nine months was about 65 percent, down from the current level of under 50 percent. Booking behavior continues to be on very short notice and restrained.

“The 2020/21 winter season will be cold and tough for us, like for so many other airlines”, states CFO Andreas Otto. “What still gives us security at present is the good liquidity situation, but we must nevertheless use all measures and levers to further reduce our costs and expenditures and make our company winter-proof. The coming months will remain challenging. But we will survive the hard winter. Next summer will be decisive.”

Structural measures should provide further relief
Long before the crisis, Austrian Airlines presented the PE20 process efficiency programme. This programme also contains a large number of structural measures designed to improve the cost position of the domestic airline in the long term. The current crisis situation has made them even more urgent. On the already familiar centralization of crew bases for flight attendants & pilots is still being worked on. The bases in Altenrhein (Bregenz), Klagenfurt and Salzburg were closed on March 31 and Linz, Graz and Innsbruck on October 31. All aircraft of the Austrian airline are to be stationed in Vienna in future. This will also result in a centralization of aircraft maintenance. Talks are underway to reorganize the structure accordingly. This concerns the technical stations in Graz, Salzburg, Innsbruck and Linz.

The contracts for ground handling in Salzburg and Klagenfurt were terminated by the respective airports. In Klagenfurt, discussions are currently underway regarding a transfer of operations, so that our employees can continue to work at the airport. Unfortunately, it was not possible to find a business transfer solution in Salzburg. The employees in Salzburg have received offers to transfer to Vienna. If it is not possible to transfer their place of residence to Vienna, Austrian Airlines would like to find amicable solutions with those affected.

Lufthansa Group reports adjusted EBIT of minus EUR 1.3 billion in the third quarter

Lufthansa Group issued this financial statement:

The global coronavirus pandemic continued to have a considerable impact on the Lufthansa Group’s earnings development in the third quarter. However, compared to the second quarter, losses were reduced due to substantial cost savings and an expansion of the flight schedule in the summer months of July and August. Adjusted earnings (Adjusted EBIT) amounted to minus EUR 1.3 billion (previous year: plus EUR 1.3 billion). The average monthly operating cash drain, before changes in working capital and investments, was EUR 200 million. In the same period, sales fell to EUR 2.7 billion (previous year: EUR 10.1 billion). Net income was minus EUR 2 billion (previous year: plus EUR 1.2 billion). Operating expenses were cut by 43 percent in the third quarter compared to the previous year, partly as a result of significantly lower fuel costs, fees and a reduction in other costs that vary based on the extent of flight operations. Using short-time work for a large portion of the personnel in combination with other measures resulted in a reduction of fixed costs by more than a third. In addition, strict liquidity management limited the cash outflows.

“Strict cost savings and the expansion of our flight program enabled us to significantly reduce the operating cash drain in the third quarter, compared to the previous quarter. Lufthansa Cargo also contributed to this with a strong performance and a positive result of EUR 169 million. We are determined to keep following this path. We want to return to a positive operating cash flow in the course of the coming year. In order to achieve this, we are advancing restructuring programs throughout the Group with the aim to make the Lufthansa Group sustainably more efficient in all areas,” said Carsten Spohr, CEO of Deutsche Lufthansa AG.

First nine months of 2020

In the first nine months of this year, the Lufthansa Group generated revenues of EUR 11 billion (previous year: EUR 28 billion). Adjusted EBIT in this period was minus EUR 4.1 billion (previous year: plus EUR 1.7 billion). Net profit was minus EUR 5.6 billion (previous year: plus EUR 1 billion). The result was impacted by non-cash special items. This included, among other things, impairment losses of EUR 1.4 billion on 110 aircraft or rights of use, which are not expected to resume operations.

Cash flow and liquidity development

At the end of September, the Lufthansa Group had EUR 10.1 billion of cash at its disposal. This figure includes stabilization measures in Germany, Switzerland, Austria and Belgium totaling EUR 6.3 billion, which have not yet been utilized.

Free cash flow adjusted for the IFRS 16 effect was minus EUR 2.1 billion in the third quarter (previous year: EUR 416 million), mainly due to customer reimbursements of ticket costs for corona-related flight cancellations amounting to EUR 2 billion. This was partially offset by cash inflows from the expansion of flight activities in July and August, which were mainly driven by short-term bookings. In the first nine months, Adjusted free cash flow was significantly less negative than the operating result. It fell to minus EUR 2.6 billion (previous year: plus EUR 685 million). A 63 percent reduction of investments to EUR 1 billion (previous year: EUR 2.8 billion) made a major contribution to this.

Net debt at the end of the third quarter was EUR 8.9 billion (December 31, 2019: EUR 6.7 billion). The equity ratio fell by 15.4 percentage points to 8.6 percent, compared to the end of 2019 (December 31, 2019: 24 percent).

Business areas

The Adjusted EBIT of Network Airlines in the first nine months amounted to minus EUR 3.7 billion. Eurowings recorded a loss of EUR 466 million.

The development of the Logistics business segment stood out positively from the rest of the Group. Despite a 36 percent decline in freight capacity, triggered by a loss of freight capacity in passenger aircraft (“bellies”), Lufthansa Cargo’s revenue rose by 4 percent in the first nine months. This positive development was driven by the operation of one of the largest and most modern freighter fleets, comprising of 13 Boeing B777Fs (incl. Aerologic) and six MD-11s. Yields increased in all regions, also due to the global loss of cargo capacity in passenger aircraft. Earnings after nine months rose to EUR 446 million (previous year: minus 33 EUR million).

In contrast, Lufthansa Technik’s result for the same period fell to minus EUR 208 million (previous year: plus EUR 351 million). The result of the LSG Group was also burdened by the worldwide decline in air traffic and the associated decrease in demand for catering services, falling to minus EUR 269 million (previous year: plus EUR 93 million) in the first three quarters.

Traffic development in the third quarter of 2020

In the third quarter of 2020 the Lufthansa Group airlines carried 8.7 million passengers, 20 percent of previous year. Offered capacity fell to 22 percent of the previous year’s level. The seat load factor was at 53 percent, 33 percentage points below the previous year’s figure. Freight capacity fell by 47 percent due to a lack of capacity on passenger aircraft. The decline in freight kilometres sold was 34 percent. This reflects a 14-percentage point higher cargo load factor of 73 percent.

Traffic development in the first nine months of 2020

In the first nine months, the Lufthansa Group airlines carried a total of 32.2 million passengers, 29 percent of last year’s period. Offered capacity fell to 33 percent of the previous year’s level. At 68 percent, the seat load factor in this period was 15 percentage points lower than last year. Freight capacity fell by 40 percent and freight kilometres sold fell by 33 percent. This resulted in a 7-percentage point higher cargo load factor of 68 percent.

Outlook

“People around the world have a great desire to travel again soon. Together with our partners, we are ready and will do everything we can to fulfil this desire as quickly as possible and with the highest health and safety standards. The important thing now is to ensure health protection and freedom of travel, for example by means of widespread rapid tests,” says Carsten Spohr.

In the upcoming winter months, demand for air travel is expected to remain low due to the global increase of infection rates and the associated travel restrictions. The airlines of the Lufthansa Group will therefore be adjusting their original planning and will offer a maximum of 25 percent of last year’s capacity from October to December. This consistent capacity reduction will ensure that flight operations continue to make a positive contribution to earnings. The Lufthansa Group is benefiting from its hub strategy, which enables it to offer connections that would otherwise be uneconomical as point-to-point connections during this current market environment. Network Airlines benefit from bundling passenger streams at the Group’s hub airports.

In order to adjust to the long-term changes in the market, the Lufthansa Group is implementing extensive restructuring measures in all business units. In the fourth quarter, the Group expects this to result in non-cash one time and restructuring expenses. Their amount depends primarily on the further progress of negotiations with the social partners. The effects will be booked in Adjusted EBIT, for which a significant year-on-year decline is expected.

The average monthly operating cash drain, excluding changes in working capital, capital expenditure and one-off and restructuring expenses, is expected to be limited to around EUR 350 million in the fourth quarter. Adjusted free cash flow is expected to decline less in the fourth quarter compared to the third quarter due to a significantly lower volume of ticket refunds.

The Group remains on track for returning to a positive operating cash flow during the course of 2021. The prerequisite for this is that the pandemic situation allows for an increase in capacity to around 50% of pre-crisis levels.

A decision has been taken to significantly scale back operations for the upcoming winter months. In the winter flight schedule, 125 fewer aircraft will be operating than originally planned. In administrative areas, only activities that are necessary for operations, legally required or related to the necessary restructuring will take place.

“We are now at the beginning of a winter that will be hard and challenging for our industry. We are determined to use the inevitable restructuring to further expand our relative competitive advantage. We aspire to remain the leading European airline group following the end of the crisis,” says Carsten Spohr.

Lufthansa Group		January – September				July – September
Lufthansa Group		2020	2019	Δ	2020		2019	Δ
Total revenue	Mio. EUR	10,995	27,524	-60%	2,660		10,108	‐74%
of which traffic revenue	Mio. EUR	7,404	21,405	-65%	1,763		8,030	-78%
EBIT	Mio. EUR	‐5,857	1,637	–	‐2,389		1,220	–
Adjusted EBIT	Mio. EUR	‐4,161	1,715	–	‐1,262		1,297	–
Net profit/loss	Mio. EUR	‐5,584	1,038	–	‐1,967		1,154	–
Earnings per share	EUR	‐10.79	2.18	–	‐3.80		2.43	–

Total Assets	Mio. EUR	39,010	44,187	-12%
Operating cash flow	Mio. EUR	-1,598	3,735	–	-1,961		1,342	–
Capital expenditures (gross)	Mio. EUR	1,023	2,785	-63%	126		881	-86%
Adjusted free cash flow	Mio. EUR	-2,579	685	–	-2,069		416	–

Adjusted EBIT-margin	in %	-37.8	6.2	-44.0 pts.	-47.4		12.8	-60.2 pts.

Employees as of 30.09.		124,534	138,350	-10%

REX takes delivery of its first Boeing 737

Rex Airlines has taken a huge step towards launching its domestic operations, with the delivery of its first Boeing 737-800 NG aircraft.

The plane touched down in Sydney this afternoon (November 5).

It’s the first of six 737s leased by Rex and will be used for training activities before the proving flight for the Civil Aviation and Safety Authority (CASA) on December 5, 2020.

Rex will begin flying Melbourne-Sydney return services on March 1 next year and to Brisbane from Easter.

The livery for Rex’s domestic airline fleet will be released by the end of the month.

Rex is Australia’s largest independent regional airline operating a fleet of 60 SAAB 340 aircraft (pre-COVID) on some 1,500 weekly flights to 59 destinations throughout all states in Australia. In addition to the regional airline Rex, the Rex Group comprises wholly owned subsidiaries Pel-Air Aviation (air freight, aeromedical and charter operator) and the two pilot academies Australian Airline Pilot Academy in Wagga Wagga and Ballarat. Rex will move into the domestic market from March 2021, flying 737-800 NGs between Melbourne-Sydney- Brisbane.

Route Map:

Iberia converts first Airbus A330 into a freighter to adapt to market

Iberia has made this announcement:

In November, the airline will operate until four weekly return Madrid-Los Angeles flights

The conversion has been made by Iberia MRO

The first Airbus A330 airliner that Iberia has converted into freighter has arrived in Los Angeles from Madrid. Until four weekly cargo flights between the two cities have been scheduled for this month.

In the early months of the Covid’19 pandemic, Iberia’s flight operations were almost exclusively confined to repatriation flights and flights carrying emergency medical supplies. This experience prepared Iberia to adapt to the new market situation and seize this opportunity.

Iberia’s sales chief María Jesús López Solás said “We’re expecting an increase in air freight demand in coming months and this in an opportunity we should try to seize. Under today’s circumstances we must adapt better than ever to market demands, and this operation will help diversify our income streams while keeping our staff active.”

IAG Cargo, the cargo division of International Airlines Group (IAG), will service these flights. At the start of the pandemic IAG Cargo were quick to develop tailored solutions for its customers cargo needs, including cargo-only flying on passenger aircraft and establishing a new charter team. With a wide network, IAG Cargo offers its services on more than 500 aircraft, to more than 350 destinations.

Retrofit by Iberia MRO

This first Airbus A330-300 converted into freighter was already undergoing an inspection in Iberia’s Madrid maintenance hangar in La Muñoza, where all Economy, Premium Economy seats and crew rest were removed along with separation panels. Carpeting was reinstalled with lights indicating the 33 cargo positions. Cargo will be held in place with netting fastened to floor rails where the seats were anchored. This configuration yields additional carrying capacity of up to 105 m3 or 18,000 kg. of cargo.

This conversion of the cabin has been carried out by Iberia MRO, which boasts long experience in aircraft retrofit operations and altering cabin configurations. They have followed Airbus guidelines and the cabin conversion has been approved by Spanish Air Safety Agency, AESA.