Lufthansa Reports First Quarter Net Loss of €2.1 Billion; Resumes Service From Munich to U.S.
Lufthansa reported on Wednesday a first quarter net loss of €2.1 billion on an 18 percent revenue decline to €6.4 billion. In a separate announcement, the carrier announced the resumption of service from Munich to the U.S. with six weekly flights.
Today, the Lufthansa Group reported a first quarter net loss of €2.1 billion on an 18 percent decline in revenue to €6.4 billion. The Group’s adjusted EBIT was (€1.2) billion, versus (€336) million for the first quarter of 2019. The company’s fixed cost development is in line with a target reduction of a third announced in March. Lufthansa will increase capacity from 3 percent of their original plan in May to 40 percent by September 2020. The Group’s first quarter results were negatively impacted by crisis-related asset impairments and fuel hedging positions. The Lufthansa Group recorded impairment charges of €266 million on decommissioned aircraft, €100 million on the goodwill of LSG North America and €57 on the goodwill of Eurowings. Fuel hedging contributed to a negative first quarter financial result impact of (€950) million. In Wednesday’s announcement, Deutsche Lufthansa AG’s Chairman of the Executive Board, Carsten Spohr said,
“Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent. In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this. Even in this unique crisis we are working hard to defend our leading position in Europe.”
During the first quarter, the airlines of the Lufthansa Group carried 21.8 million passengers, a year-over-year decline of 26.1 percent. Load factor fell 4.7 percent to 73.3 percent, while freight capacity fell 15 percent and freight kilometers sold declined 15.5 percent, resulting in a 0.4 percent lower cargo load factor of 62.5 percent. The Group ended the third quarter with €4.3 billion in liquidity, which has since been substantially bolstered by around €9 billion in state support and other capitalization measures. The company is currently experiencing a monthly cash burn of around €800 million.
Lufthansa Group Airlines will expand their schedules from mid-June to approximately 2,000 weekly connections to over 130 global destinations. As previously mentioned, the company will offer up to 40 percent of their originally planned schedule by September, including the restoration of around 90 percent of short-haul and 70 percent of long-haul destinations. The Group only expects a gradual increase in demand and plans on keeping 300 aircraft parked in 2021, while 200 will remain grounded in 2022. Although the company expects the crisis to end by 2023, the Group expects that its fleet will remain around 100 aircraft smaller on reduced demand.
In a separate announcement on Wednesday, Lufthansa announced the resumption of service from Munich to the U.S. with six initial weekly flights. In this important milestone, the carrier will fly to the U.S. from Munich for the first time since March 13, 2020, with three weekly returns to Los Angeles and three weekly returns to Chicago. Both routes will be served by modern, economical and environmentally friendly Airbus A350s.
Source: Lufthansa Group