Lufthansa shuts Germanwings off; fleet reduced by 100 aircraft
While Lufthansa (LHAB) (LHA) significantly bolstered its liquidity positions, as the group received multiple state aid packages, the company announced a restructuring program called “ReNew”. The German airline group is looking to significantly reduce its fleet, limit new aircraft deliveries and close the door on one of its subsidiaries.
Despite its financing currently being “secure”, Lufthansa (LHAB) (LHA) still aims to cut costs. Its plan is to limit new aircraft deliveries to 80 until 2023, which will reduce its planned investment into its fleet by half. Furthermore, the total fleet of the Lufthansa (LHAB) (LHA) group will be reduced by 100 aircraft. Lufthansa (LHAB) (LHA) already retired six Airbus A380, eleven Airbus A320 and five Boeing 747-400 jets ahead of schedule.
Lufthansa (LHAB) (LHA) subsidiary Germanwings will not resume operations. The low-cost carrier has operated under the Eurowings brand since March 2018, to simplify the Group’s operations. Furthermore, 1,000 jobs will be cut at the administration of Lufthansa (LHAB) (LHA) , as the group accelerates the transformation of Lufthansa Airline into its own separate entity.
“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,” read a statement by Lufthansa (LHAB) (LHA) , as it continues negotiations with its unions. The flight attendant union UFO already agreed to make concessions to save the company up to $561 million (€500 million). Previously, Vereinigung Cockpit (VC), a German pilot union, indicated that it offered to cut its pilots’ salaries by up to 45%, which would save Lufthansa (LHAB) (LHA) up to $400 million (€350 million).
Lufthansa (LHAB) (LHA) finally cleared the remaining hurdles of its $9.8 billion (€9 billion) state aid package on June 25, 2020, when the company’s shareholders approved the deal and the strings attached to it. The package, which includes the German government’s Economic Stabilization Fund (WSF) taking a 20% stake in the airline, concluded a month-long drama filled with insolvency deliberations and shareholder revolts within Lufthansa (LHAB) (LHA) .The German airline group also received help from the Austrian and Swiss governments, as they pleaded $676 million (€600 million) and $1.35 billion (CHF1.275 billion) to Austrian Airlines and Swiss International Air Lines, respectively.
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