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Urgent treatment for airline that’s losing $1.6 million an hour

July 13, 2020 Headline News 1 Comment Email Email

The paralysis of global travel triggered by the coronavirus pandemic is costing Europe’s second-biggest airline, Lufthansa, the equivalent of AUD 1.6 million an hour – forcing it to make a plea for state aid in the face of what its chief executive calls “the biggest challenge in our 65-year history”.

Some 700 planes out of the airline group’s 763-strong fleet are grounded and management is talking ominously of “a calculated personnel surplus of at least 22,000 full-time positions in the companies of Lufthansa group”.

That puts the Qantas staff cuts in perspective, though Lufthansa is a far bigger airline. (Qantas plans to cut 6000 jobs across all parts of the business and keep a further 15,000 staff stood down while international travel bans remain in place.)

Deutsche Lufthansa AG chief executive, Carsten Spohr, confirmed last week the German airline giant is losing one million euros an hour, warning that it will need state aid to survive.

Lufthansa, one of the five founding members of the Star Alliance, the world’s largest airline alliance, is part of a group which includes subsidiaries Eurowings, SWISS, Brussels and Austrian Airlines.

Lufthansa has many fans in the Australian travel agency community, but its passenger carriage has been slashed to skeleton levels. Before the pandemic brought the aviation industry to its knees, the Lufthansa group was carrying about 350,000 passengers every day. The figure has fallen to fewer than 3000 passengers a day, or less than 1% of the former total.

Spohr told staff in a video that Lufthansa had begun bailout discussions with governments in countries where its airlines are based.

“I’m optimistic that these talks in Bern, Berlin, Brussels and Vienna will lead to good and positive outcomes,” he said.

Lufthansa is closing down budget carrier Germanwings and getting rid of more than 100 aircraft.

An update on the airline by DJ’s aviation can be seen below:

The following resolutions were adopted by Lufthansa’s executive board a couple of days ago and communicated internally:

  • Following the downsizing of the Executive Board of Deutsche Lufthansa AG, the executive board and management bodies of the subsidiaries will be reduced in size compared with 2019. In a first step, the number of board members was reduced by one position each at Lufthansa Cargo AG, LSG Group, and Lufthansa Aviation Training.
  • Government loans and equity participations are to be reduced as quickly as possible to avoid a further increase in interest charges (restructuring program element “RePay”).
  • The number of leadership positions throughout the Group will be reduced by 20%.
  • The administration of Deutsche Lufthansa AG will be reduced by 1000 positions.
  • The process of transforming Lufthansa Airline into a separate corporate entity is being accelerated.
  • The already planned reduction of sub-fleets and the bundling of flight operations will be implemented. This measure includes the long- and short-haul leisure business at the Frankfurt and Munich hubs. At Lufthansa alone, 22 aircraft have already been phased out ahead of schedule, including six Airbus A380, eleven Airbus A320 and five Boeing 747-400 aircraft.
  • The financial planning up to 2023 provides for the acceptance of a maximum of 80 new aircraft into the Lufthansa Group carriers’ fleets. This will reduce the investment volume for new aircraft by half.

A statement issued last week said: “Due to the long-term effects of the coronavirus pandemic, which are particularly serious for air travel, there is a calculated personnel surplus of at least 22,000 full-time positions in the companies of Lufthansa Group even in the period following the crisis.

“Nearly all airlines worldwide are currently affected by personnel surplus. In contrast to many of its competitors, Lufthansa will continue to avoid layoffs wherever possible. This requires agreements on crisis-related measures with unions and social partners representing the Lufthansa employees. So far, negotiations have only been successful with the UFO cabin union.”

Written by Peter Needham

Currently there is "1 comment" on this Article:

  1. Frustrated says:

    LH have a big issues with passengers, since the start of March they have ignored all requests for refunds. Like Sergeant Schultz said “I know nothing”!
    This may make the post sound funny and cause some ridicule of LH.
    Saying nothing for 5 months is not acceptable and causes agents and existing passenger a loss of confidence in relation to outcomes and transacting business in the future..

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