Lufthansa says it will be a smaller airline post-Covid with perhaps 10,000 fewer jobs
Lufthansa has said that it will be left with 10,000 excess staff, when the Covid crisis ends, as it may become a permanently smaller airline. It is unlikely to experience pre-crisis levels of demand until 2023. Demand may not recover unless and until there is a vaccine that is available worldwide. And it says it will have to spend more the €1bn a year to repay loans after the crisis. It can no longer borrow the money it needs commercially. Almost 90,000 of its 135,000 employees are furloughed, and many staff would be lost, though every effort will be made to preserve jobs. Also the load factor may be 10% lower in future. It may also get rid of about 100 planes, keeping larger models. The CEO, Carsten Spohr, said “We were the first industry to be affected by this global crisis and aviation will be one of the last to leave it.” [And they helped the rapid spread of the virus round the world]. IATA is predicting a 48% fall in air passengers in 2020, compared to 2019, taking global numbers back to those of around 2013. Lufthansa may axe Germanwings and shrink its Eurowings division.
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Lufthansa warns of 10,000 excess jobs
German carrier tells staff company is unlikely to experience pre-crisis levels of demand until 2023
By Joe Miller in Frankfurt (Financial Times)
Lufthansa says it will have to spend more the €1bn a year to repay loans after the crisis
Lufthansa has said that it will be left with 10,000 excess staff as it becomes a permanently smaller airline due to Covid-19, in one of the starkest signs of the industry’s woes since the outbreak began.
In a webcast to employees on Friday afternoon, chief executive Carsten Spohr said the German carrier, which has already furloughed almost 90,000 of its 135,000 employees, was unlikely to experience pre-crisis levels of demand until 2023.
“We expect yields to be 10 per cent lower and the load factor on our aircraft to be 10 per cent lower,” he said, adding that the company would do what it could to preserve jobs.
“After the crisis, we will have to spend over a billion euros a year to repay loans.”
The Frankfurt-based airline, which is seeking state aid in Germany, Austria, Belgium and Switzerland, also said it would be likely to rid itself of 100 aircraft as it concentrated on operating fewer, larger planes.
Earlier this week, unions representing Lufthansa employees appealed to Angela Merkel’s government, calling for state aid to be contingent on maintaining jobs.
But on Friday, Mr Spohr implied that the airline’s workforce would have to shrink. “This pandemic will not be over until there is a vaccine available worldwide,” he said.
“We were the first industry to be affected by this global crisis and aviation will be one of the last to leave it,” he added.
Mr Spohr’s warning comes days after Australia’s second-biggest carrier, Virgin Australia, became the first large airline casualty of coronavirus, entering voluntary administration after failing to secure a bailout.
If a prediction by the trade body Iata of a 48 per cent fall in traffic this year proves correct, at least seven years of airline passenger traffic growth would be wiped out in 2020, according to consultancy Cirium.
Lufthansa, which is burning through €1m an hour, said it was flying just 1 per cent of its usual passenger numbers.
On Thursday, the group warned that it was only weeks away from running out of cash.
Despite emphasising last month that it would be able to borrow against a fleet worth about €10bn, Lufthansa said it could no longer raise money to pay for liabilities such as ticket refunds on the capital markets.
“This leaves government help as the last remaining hope for Lufthansa to remain solvent,” said Daniel Roeska, an airline analyst at Bernstein.
The company has already announced several cost-saving measures, including plans to axe its Cologne-based Germanwings brand, and shrink its Eurowings division.
Lufthansa has also been operating without a chief financial officer since the start of the month, after Ulrik Svensson resigned on medical advice.
An earlier version of this story cited a transcript provided by Lufthansa which said that 10,000 jobs would have to be axed. The airline issued a correction hours later.
https://www.ft.com/content/14ac4524-3bf1-44dd-aacb-2cb7d1d451ab