Lufthansa Grounds A380 Fleet, Seeks Additional Help in COVID-19 Pandemic
Joe Cortez September 21, 2020
After rumors floated of a reduced fleet, Lufthansa Group is finalizing budget cuts and grounding aircraft to survive. The airline will temporarily ground all Airbus A380 airframes, and reduce their monthly cash flow by €100 million per month.
Germany’s Lufthansa Group will once again make significant cuts to their fleet and staff, after demand for airfare in Europe dropped dramatically in September 2020. In a press announcement, the airline conglomerate outlined a number of cost-cutting measures intended to help the carrier survive the COVID-19 pandemic, including temporarily grounding their entire Airbus A380 fleet.
“ReNew” Restructuring Program Intends to Cut Costs, Reduce Aircraft and Layoff Personnel
When Lufthansa accepted the first German government bailout, the airline assumed that by the end of the year, passenger traffic would increase to at least half of what they flew in 2019. However, with continued lockdowns, including European Commission recommendations to limit inbound travel and Ireland’s tighter restrictions, the airline now anticipates demand will only fall between 20 and 30 percent of the previous year. As a result, the airline is now accepting they will have to make significant cuts to survive.
“The outlook for international air traffic has significantly worsened in recent weeks,” Lufthansa wrote in the press announcement. “With the summer travel season coming to an end, passenger and booking figures are declining again, after slight signs of recovery were still evident in July and August.
To start, the airline anticipates they will be forced to remove 150 aircraft from their fleet by 2025. As of today, this temporarily includes all 14 Airbus A380 and 10 Airbus A340-600 airframes. These aircraft will be held in long-term storage, and could be reactivated if more passengers book airfare with the airline. An additional seven A340-600 aircraft owned by the airline will be “permanently deactivated.”
In addition, the airline will start cutting additional staff from their ranks. In addition to laying off 22,000 full-time employees, the carrier will also reduce 20 percent of their management positions by the end of March 2021. This will coincide with cutting their total office space in Germany by 30 percent.
With all the cuts, the airline is planning to adhere to a strict budget which will cut down their outflow of liquidity by €100 million ($117.39 million USD) per month. The airline is setting a goal of returning to positive cash flows by 2021.
Lufthansa Joins Stakeholder Voices Calling for Coronavirus Testing
In order to be successful once more, Lufthansa is joining a growing number of aviation stakeholders in calling for passenger Coronavirus testing instead of quarantines. The German company says that the lack of testing is, in part, driving the uncertainty in consumer travel.
“In the Executive Board’s assessment, the continuing high level of uncertainty in global air traffic makes short-term adjustments to the current market situation unavoidable for the foreseeable future,” the airline says. “The Board considers the expansion of [COVID-19] tests prior to departure an essential prerequisite for the resumption of global mobility. Consistent testing is possible, increases safety for travelers and is a better alternative than changing inconsistent entry and quarantine regulations.”
The call is similar to one put forward by Airlines for Europe, which issued a “last call” for aviation support earlier in September 2020.
Feature image courtesy: Lufthansa Group
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Not simply a pic of a 747, but that of a new generation 747-8 which should have many happy years to come..
If Lufthansa had blocked middle seats and refunded sooner the monies that didn't belong to them, they would've gotten at least 3 additional group bookings from us. They mishandled the refunds even after government funding was secured. Quite honestly, I can't care than much at this point. I hope the government holds back any further funding unless manager payments are cut and a more sizeable percentage of ownership falls to the government. Screw 'em.
Hi Irishguy, the demand will fall to between 20 and 30% of last Year’s numbers, not fall by 20-30%, it could have been written clearer.
An article about A380s and the picture is of a 747?
"the airline now anticipates demand will only fall between 20 and 30 percent of the previous year." Given that the first sentence of that paragraph says that earlier they were expecting a fall of 50 percent, then this sentence jars with the rest of the article.