The Lufthansa Group has reported a fourth quarter net loss of €1.1 billion on a 71 percent revenue decline to €2.6 billion versus Q4 2019. For the full year 2020, the company reported a net loss of €6.7 billion on a 63 percent year-over-year revenue decline to €13.6 billion.
On Thursday (March 4, 2021), The Lufthansa Group reported their fourth quarter and full year 2020 financial results. The Group reported a fourth quarter net loss of €1.1 billion or (€2.12) per share on a 71 percent revenue decline versus Q4 2019 to €2.6 billion. For the full year 2020, the Group reported a net loss of €6.73 billion or (€12.51) per share on a year-over-year revenue decline of 63 percent to €13.6 billion. During the fourth quarter the company limited their operating cash drain to approximately €300 million/month due to accelerated cost reductions. Lufthansa Group Airlines are preparing to offer 70 percent of pre-pandemic capacity in the short-term.
In Thursday’s announcement, Deutsche Lufthansa Group AG’s CEO, Carsten Spohr, said,
“The past year was the most challenging in the history of our company - for our customers, our employees and our shareholders. 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.
“The unique crisis is accelerating the transformation process in our company. 2021 will be a year of re-dimensioning and modernization for us. The focus will remain on sustainability: We are examining whether all aircraft older than 25 years will remain on the ground permanently. From the summer onwards, we expect demand to pick up again as soon as restrictive travel limits are reduced by a further roll-out of tests and vaccines. We are prepared to offer up to 70 percent of our pre-crisis capacity again in the short term as demand increases. With a smaller, more agile and more sustainable Lufthansa Group, we want to maintain our leading position worldwide and secure the jobs of around 100,000 employees in the long term.”
Despite the obvious challenges in the passenger business, the Group’s cargo business reported record results with an Adjusted EBIT of €772 million versus €1 million the previous year. Group CAPEX for 2020 was reduced year-over year by approximately two-thirds to €1.3 billion, largely attributable to amended agreements with aircraft manufacturers. The company’s net debt, including lease liabilities, increased from €6.7 billion at December 31, 2019 to €9.9 billion at the close of 2020 and pension liabilities grew by 43 percent to €9.5 billion. The Lufthansa Group ended the year with approximately €10.6 billion in liquidity, including €5.7 billion in unutilized government stabilization measures.
During H2 2020, The Group successfully returned to the capital markets, raising €2.1 billion via bonds and aircraft financing. Additionally, on February 4, 2021, the Group placed two bonds, raising a total of €1.6 billion, of which the proceeds were used to repay a €1.0 billion KfW (German Development Bank) loan. Commenting on the Group’s continued ability to raise funds on the capital markets and financial condition, Deutsche Lufthansa Group AG’s Chief Financial Officer, Remco Steenbergen, said,
“The latest transactions have shown how much confidence the market has in our company. The Lufthansa Group is well financed beyond 2021. This is also helped by the previously unused elements of the stabilization package, which we can draw on as needed to further strengthen our balance sheet. Thanks to our recent financing measures, we have sufficient liquidity to withstand a market environment that remains difficult. The next step is to strengthen our balance sheet and reduce debt. In doing so, we will reduce our costs through successful restructuring. Our crisis and cost management has taken effect much faster than originally planned. At the same time, our business has recovered more slowly than we had initially hoped. In addition to repaying the government stabilization funds, the goal of our financial strategy is for the financial markets to re-evaluate our creditworthiness to investment grade in the medium term.”
During 2020, the Group’s total number of employees fell by around 28,000 and the company plans a further headcount reduction of 10,000 in Germany, or the corresponding personnel costs will have to be compensated. The Group’s fleet will be reduced to approximately 650 aircraft in 2023 and the company expects capacity to return to around 90 percent of pre-pandemic levels by 2025.
Source: Lufthansa Group