Lufthansa Group expects sharp recovery in summer 2021
Lufthansa Group bets on the COVID-19 vaccines and testing procedures to lead the company into a “sharp recovery” in passenger traffic around the summer season of 2021.
While other European air carriers feel insecurity over the ongoing decrease regarding the air travel demand, Lufthansa Group seems to spread an optimistic point of view. Speaking to Eurocontrol on January 21, 2020, Carsten Spohr, the CEO of the group, outlined that with the rollout of the vaccine and the potential removal of mandatory quarantines, the passenger traffic should abruptly increase.
“I think it will give us a clear recovery around summertime. [...] We don’t know if this will increase to 40, 50, or 60 percent [of 2019 levels] overall for the year . In our case, the group has planned for all three percentages to play out. I hope, at least, we won’t be much off either way ", said Spohr.
According to Spohr, despite experiencing continuous losses of up to €1 million every two hours, Lufthansa (LHAB) (LHA) has “just taken” a €3 billion in the government-backed loan to stabilize its liquidity position. The CEO outlined that despite the government was able to support the group with an additional €6 billion in loans, the company might not need the injection “depending on how the year plays out”.
The whole financial support package consists of €9 billion which was initially granted to the group in June 2020 in order to keep the airline afloat in exchange for a 20% stake in Lufthansa (LHAB) (LHA).
Despite that the group tried to avoid redundancies as far as possible, following its restructuring program the company has already cut “every fifth staff member”, said the CEO.
“There will be more people who will leave, but it has to be done to adjust for the new normal and to survive the crisis,“ added Spohr.
In total, the group cut 29,000 jobs, leaving the company with 106,000 out of 135,000 employees compared to the pre-pandemic levels. Under the program, Lufthansa Group also plans to permanently reduce its fleet by at least 100 aircraft. Sphor outlined that the group has already grounded the whole Airbus A380 fleet.
”We took four-engine aircraft out, we grounded the A380 fleet, we took the A340-600 out and we don’t plan to bring them back into the air. [...] That is a significant fleet modernization happening by the fact that we are now a smaller airline, and just by the pure nature of the math behind it, [we are modernizing] our fleet faster,” said Sphor.
According to the CEO, Lufthansa Group expects to recover to the pre-crisis levels before 2024.
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