Lufthansa Weighs More Aircraft Retirements After Record Loss

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Lufthansa may permanently ground more planes to emerge leaner from the coronavirus pandemic, the German airline group said on Thursday as it posted record losses for 2020.

The group, which includes the Austrian Airlines, Swiss and Eurowings brands, trimmed its 2021 capacity plans as COVID-19 disruption drags on but said it still hoped for a summer upturn.

“We are examining whether all aircraft older than 25 years will remain on the ground permanently,” Chief Executive Carsten Spohr said, pledging to make 2021 “a year of redimensioning and modernisation” for the company.

Lufthansa posted a 1.141 billion-euro ($1.38 billion) fourth-quarter net loss with a 1.29 billion deficit in adjusted earnings before interest and tax (EBIT). Revenue fell 71% to 2.59 billion euros.

The airline, which received a government-backed 9 billion euro bailout last June, said it will operate at 40-50% of pre-crisis capacity this year, down from an earlier 40-60% forecast.

Summer travel will nonetheless pick up swiftly as and when restrictions are eased, Spohr said, and the group stands ready to restore 70% of its flight schedule “in the short term”.

The airline group reported a 6.73 billion euro full-year net loss and 5.45 billion adjusted EBIT on 13.59 billion euros in revenue, down 63%.

Analysts had expected losses of 6.63 billion euros for 2020 and 1.24 billion euros for the last three months, according to the company’s own consensus polling.

Lufthansa, which has outlined plans to cut its overall fleet to 650 planes in 2023, gave no further details of possible further aircraft retirements or their potential replacement with newer, more fuel-efficient jets.

Net debt increased to 9.9 billion euros as of Dec. 31 from 6.7 billion a year earlier, while total liquidity stood at 10.6 billion euros, including 5.7 billion euros in unused government aid.

“We have sufficient liquidity to withstand a market environment that remains difficult,” Chief Financial Officer Remco Steenbergen said.

Operating cash burn was reduced to 300 million euros per month in the fourth quarter and is expected to remain stable at that level in the first three months of 2021, the company said.

-Reuters

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