Brussels Airlines and Lufthansa: ‘future depends on summer 2021’
This Thursday, German air transport group Lufthansa and its Belgian subsidiary, Brussels Airlines, have announced record losses for 2020. The group’s revenues fell from 36,4 to 13,6 billion euros, losing €300 million per month in operating cash during the last quarter. Brussels Airlines isn’t faring any better, with revenues down by 72% and passenger numbers plummeting by 77%.
2021 is also in the red, but the group’s future and its companies will depend on the summer demand, which itself completely relies on the lift of traffic restrictions and vaccines’ rollouts. Lufthansa pleads for the introduction of health passports.
500 out of 800 planes on the ground
This Thursday, Lufthansa Group has closed the financial books of 2020 with a net loss of 6,725 million euros. After the slight restart of the summer, the second wave hit, and 500 out of the 800 Lufthansa planes are stuck on the tarmac. During the fourth quarter of the year, the German group had to deal with an operating cash drain of around 300 million euros per month.
Nearly all factors are in the red at the end of the year, with -63% in turn over and -75% in passengers transported. Even the employee count has dropped. According to the group, it’ll be the same story for 2021 except with a smaller operating loss.
Contrary to the rest, Lufthansa Cargo is booming, showcasing record results. It achieved an adjusted EBIT of 772 million euros compared to 1 million the previous year, despite a 36% drop in freight capacity.
Brussels Airlines still on track
For the Belgian subsidiary, results are even bleaker. Revenues are down by 72% to €414 million, and the number of passengers transported decreased by 77%. The story would be much different without the Belgian government €290-billion-worth helping hand and cost-saving measures.
However, Brussels Airlines and its new German CEO, Peter Gerber, continue with its pre-Covid-19 objectives to break even in 2022 or 2023 and reach an 8% profit margin by 2024. The airline aims at playing on flexibility, still holding its Africa strong card.
Long-haul flights for the account of Eurowings will also be scrapped, along with 256 jobs on the line. Brussels Airlines’ hopes for the future are based on the good development of the Reboot+ restructuration plan. Cost reduction measures have been put up, and the airline authorizes itself a 3,3% in CASK (cost related to the available seats per kilometer).
“The past year was the most challenging in the history of our company. Travel restrictions and quarantine have led to a unique slump in demand for air travel. Now internationally recognized, digital vaccination and test certificates must replace travel bans and quarantine so people can once again visit family and friends, meet business partners, or learn about other countries and cultures,” declared Carsten Spohr, CEO of Lufthansa.
With an uncertain future facing it, Lufthansa Group expects its capacity on offer to increase to 40 to 50% if 2019 levels for the full year of 2021.