Lufthansa Group Reports Third Quarter Net Loss of €2 Billion on 74 Percent Revenue Decline to €2.7 B
The Group’s third quarter adjusted EBIT loss was reported as (€1.3) billion, while the net loss was (€1.97) billion or (€3.80) per share. The Lufthansa Group ended the quarter with €10.1 billion in liquidity, including €6.3 billion in unutilized stabilization measures.
On Thursday (November 5, 2020), the Lufthansa Group reported a third quarter EBIT loss of (€1.3) billion and a net loss of (€1.97) billion or (€3.80) per share. The Group’s third quarter revenue declined year-over-year by 74 percent to €2.7 billion compared to €10.1 billion during Q3 2019. During the third quarter, the company reduced operating expenses by 43 percent compared to the same period last year, largely attributable to a reduction in fuel costs, fees and flight operations expenses. The company ended the quarter with €10.1 billion, including €6.3 billion in unutilized stabilization measures and the ongoing strong performance of Lufthansa Cargo continues to support the Group’s liquidity. With the Group’s hub strategy, the company can operate cash-positive flight operations, even in the current market environment. Lufthansa believes they can limit monthly cash burn to approximately €350 per month in the fourth quarter. In Thursday’s announcement, Deutsche Lufthansa’s AG’s CEO, Carsten Spohr, said,
“Strict cost savings and the expansion of our flight program enabled us to significantly reduce the operating cash drain in the third quarter, compared to the previous quarter. Lufthansa Cargo also contributed to this with a strong performance and a positive result of EUR 169 million. We are determined to keep following this path. We want to return to a positive operating cash flow in the course of the coming year. In order to achieve this, we are advancing restructuring programs throughout the Group with the aim to make the Lufthansa Group sustainably more efficient in all areas.
"People around the world have a great desire to travel again soon. Together with our partners, we are ready and will do everything we can to fulfil this desire as quickly as possible and with the highest health and safety standards. The important thing now is to ensure health protection and freedom of travel, for example by means of widespread rapid tests. We are now at the beginning of a winter that will be hard and challenging for our industry. We are determined to use the inevitable restructuring to further expand our relative competitive advantage. We aspire to remain the leading European airline group following the end of the crisis.”
During the third quarter, Lufthansa Group airlines carried 32.2 million guests, a year-over-year decline of 80 percent on a 78 percent reduction in capacity. The Group operated with a seat load factor of 53 percent, a 33 percent decline versus last year. The company’s freight capacity during the quarter fell 47 percent due to the lack of passenger aircraft belly hold capacity. Freight kilometers sold declined 34 percent on a 14 point increase in cargo load factor to 73 percent.
The Lufthansa Group expects winter 2020/21 demand to remain low due to a resurgence of COVID-19 cases and the associated travel restrictions. Therefore, the company will reduce their planned capacity to 25 percent in the fourth quarter versus Q4 2019, with 125 fewer aircraft operating than originally planned. The company is implementing extensive restructuring measures in all business units to adjust to the long-term changes in the market, which is expected to result in one-time non-cash Q4 expenses. The Group believes they are on track to achieve a positive operating cash flow during 2021, providing capacity can be increased to at least 50 percent of pre-pandemic levels.
Source: Lufthansa Group