The Lufthansa Group is losing around one million euros per hour, according to CEO Carsten Spohr. The German flag carrier’s CEO made the comments in a speech released in advance of the airline’s AGM next week.
Airlines across the globe are feeling the impact of the current crisis. Lufthansa is no different. In fact, in terms of its flight schedule, the airline has been pushed back to where it stood when it launched in 1955, 65 years ago. This is something Spohr described as “extremely bitter, devastating, and painful.” Now the airline is faced with surviving the current situation and then rebuilding its operations.
Practically no earnings
In his speech, due to be delivered on Tuesday, Spohr emphasized that as the situation currently stands, the Lufthansa Group has practically no earnings. However, it still needs to pay for staff, materials, rent, and fuel hedging. As a result, the airline is currently losing around one million euros ($1,095,710) per hour. Around €16,667 per minute.
While the airline still has liquidity of €4 billion, the losses have meant that the Lufthansa Group has been forced to alter its operations radically. One change will affect the shareholders that Spohr is addressing. They will not receive a dividend despite Lufthansa’s successful 2019.
What else is happening?
Lufthansa has been left operating a skeleton service. The airline group has been canceling 3,000 flights per day. This means that 700 of its 760 aircraft are currently grounded, including the entire fleets of Air Dolomiti, Austrian Airlines, and Brussels Airlines.
The 60 odd aircraft that are still operating aren’t being filled. The airline is seeing passenger numbers of 1% of last year’s figures. It just retracted its social distancing policy. However, this likely won’t have a significant effect on operations.
The airline is mainly relying on freight operations for the time being. It has so far modified four A330s into makeshift freighters, with more to follow. Additionally, it seems as though Airbus is working with Lufthansa to be able to convert A350s into freighters.
Additionally, Lufthansa has intended to take one new aircraft every two weeks for the next ten years. This cannot continue. Spohr commented:
We are also in negotiations with aircraft manufacturers with regard to postponing aircraft deliveries because we will not be able to return to our old fleet size for an indefinite period.
The Lufthansa Group, as a whole, intends to cut the size of its fleet by 100 aircraft. Meanwhile, it will be left with 10,000 too many staff, with job cuts possible.
Lufthansa will emerge from the other end of the crisis as a different airline. Exactly how different will depend on how the next few months go before the hopefully restarts in Autumn.
What do you think Lufthansa’s future looks like? Let us know your thoughts in the comments!