Lufthansa even deeper in the red than expected
This summer, it seemed that aviation was recovering from the corona crisis faster than expected. Nothing could be further from the truth. The German aviation group Lufthansa has lost even more billions than expected during the summer due to the corona pandemic.
The figures for its subsidiary Brussels Airlines are also deep red. BA has made a loss of 233 million euros in the first nine months of this year. The number of passengers fell by 73% compared with the same period last year. Revenue also fell by 70% to 339 million euros.
For Lufthansa, analysts have assumed a net loss of 1,6 billion euros. The deficit below the line finally came to 1,97 billion euros, despite a cost-cutting plan. Depreciation for aircraft taken out of service and financial transactions to hedge the company against rising fuel prices pushed the net result further below zero.
Reduction of flights
According to the Management Board of the parent company of Brussels Airlines, Lufthansa will remain on course for a positive operating cash flow in the course of next year. For this to happen, the pandemic will have to evolve so that the airlines can increase their offer to 50% of the pre-crisis level.
However, due to the new lockdown measures in Europe, all the companies within the group will reduce their offer over the winter to a maximum of 25% of last year’s capacity.
200 million loss per month
During the past quarter, Lufthansa lost an average of 200 million euros per month. The company plans to limit the operating cash loss to 350 million euros per month for the fourth quarter.
The latest figures for Brussels Airlines are coloring deeply red too. It carried 2 107 954 passengers between January and September, compared to 7 905 953 last year. There were 18 757 flights, a 70% decrease compared to the 62 683 flights in the first three quarters of 2019. The occupancy rate fell by 11,4% to 70,6%.
Reboot Plus plan
However, operating expenses decreased by 49% to 607 million euros, mainly due to the volume-related decrease in the cost of materials and services.
Due to the new coronavirus outbreak, Brussels Airlines will intensify and accelerate its existing turnaround program. Once the network has been adapted, the new Reboot Plus plan will reduce the fleet by 30% and the workforce by 25%. By the end of September 2020, the number of employees has already fallen by 14% compared to 2019.
Still cash due to state aid
Due to the still unstable and unpredictable situation worldwide, Brussels Airlines does not consider it possible to make a forecast for 2020. However, the Belga news agency points out that as a result of state aid from several European countries to Lufthansa, the company still has a strong cash position – 10,1 billion euros at the end of September.
This figure includes stabilization measures in Germany, Switzerland, Austria, and Belgium, totaling €6,3 billion, which have not yet been utilized. In Belgium, too, the federal government provided a 290 million euros loan for Brussels Airlines that wasn’t ‘touched’ so far.