Tue, May 21, 2024

Lufthansa Lost More than 2 Billion Euros During the Q1

Flag carrier and coronavirus pandemic

The aviation industry is struggling to deal with the economic impact of the coronavirus pandemic. Moreover, even giant companies suffered serious looses. Germany’s flag carrier Lufthansa reported a substantial loss for the first quarter of 2020 due to the coronavirus pandemic.

Importantly, the flag carrier reported a net loss of 2.1 billion euros ($2.35 billion) for the first three months of the year. The company released this information on Wednesday. The company lost 342 million euros over the same period in 2019.

It makes sense as the number of passengers in the first quarter fell by more than 26% compared to a year ago. It is worth mentioning that write-downs contributed to the loss. For example, the Lufthansa recorded an impairment charge of 266 million euros on decommissioned aircraft. Moreover, the company wrote down 100 million euros on the book value of its catering unit LSG North America as well as 57 million euros on Eurowings. As a reminder, Eurowings is a budget carrier that belongs to Lufthansa.

Interestingly, the company planned to release the information regarding the first quarter of 2020. However, due to the uncertainty surrounding the coronavirus pandemic, Lufthansa released the results of that quarter on June 3.

Air travel and Lufthansa Aviation industry and the global economy

Global air travel all but disappeared as government-imposed travel restrictions. Moreover, it would be tough to reassure the passengers that it is safe to board an aircraft. Also, there are that the second quarter will be quite difficult due to the pandemic. Travel bans across the world continued to affect airlines.

In April, the number of passengers fell by 98.1% compared to the same period in 2019. People should take into account that Lufthansa is one of the largest airlines in the world and a 98.1% drop in passenger numbers is a serious problem for the company.

Moreover, the company parked 700 of its 763 aircraft in April and May. This is not the end of the story as the airline doesn’t expect the current crisis to end before 2023.

Lufthansa made several steps to reduce costs. For example, it had reduced the working hours of 87,000 employees. Moreover, the company postponed or canceled several projects planned before the crisis. Also, Brussels Airlines will reduce its fleet by 30%. Another that also belongs to Lufthansa Group will cut its fleet by 20%. Additionally, both of them plan to reduce the number of employees.

Last but not least, the German government will get a 20% stake in Lufthansa.

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