Lufthansa dumps old jets to offset massive losses

The German flag carrier Lufthansa announced it may be forced to ground permanently more airplanes to curb costs related to Covid-19 air travel restrictions, Reuters reported. Lufthansa reported a record 6.7 billion euro loss for 2020.

“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 reported a 1.14 billion-euro fourth-quarter net loss with a 1.29 billion deficit in adjusted earnings before interest and tax.

Lufthansa cut its global workforce by 20% to 110,000 in 2020 and is seeking to eliminate another 10,000 German jobs or equivalent wage costs. The group, 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. The group’s full-year net loss of 6.73 billion euros was on 13.59 billion euros in revenue, down 63%. The company predicted a narrower 2021 EBIT loss than last year’s 5.45 billion euros.

The airline group has outlined plans to cut its fleet to 650 planes in 2023 and phase out ageing Boeing 747-400s and Airbus 340-600s. A slower recovery means more grounded planes may never return to service before retirement. Like many airline peers, Lufthansa posted record 2020 cargo profits as mass aircraft groundings squeezed capacity and sent freight prices soaring. Divisional adjusted EBIT jumped to 772 million euros from 1 million, dwarfed by passenger losses. 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 aid.