Lufthansa vows company revamp as losses balloon

View of the Lufthansa logo imprinted on the vertical stabilizers jutting out from the empennages of several airplanes grounded at the international airport in Frankfurt am Main, Germany, 02 June 2020. EPA-EFE/RONALD WITTEK

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Lufthansa vowed to step up up restructuring measures after posting a first-quarter net loss of 2.1 billion euros ($2.35 billion), days after agreeing a state bail-out amid the fallout from the coronavirus pandemic.

The German carrier’s pledge to slash costs comes as it braces for a significant decline in 2020 earnings.

“In view of the very slow recovery in demand, we must now take far-reaching restructuring measures,” said Chief Executive Carsten Spohr, adding the group was in talks with labour representatives over cutbacks.

The first quarter loss, which compares to a net loss of 342 million euros in the year-earlier period, was driven by write-downs of 266 million euros on its fleet, as well as write-downs on the book value of catering business LSG North America by 100 million and on budget unit Eurowings by 57 million, the carrier said on Wednesday.
A slump in fuel hedging contracts was another 950 million euro burden on the bottom line.

Lufthansa, which had grounded almost all its aircraft at the height of the pandemic, confirmed a loss before interest and tax of 1.2 billion euros during the first three months of the year, first reported in April.
The group’s non-executive board on Monday approved a 9 billion euro ($10 billion) government bailout that will force it to cede some of its prized landing slots to rivals.

Lufthansa Group, which includes Swiss, Austrian Airlines and Brussels Airlines, suffered a 98% slump in April passenger numbers from the year-earlier month to 241,000.
But it laid out plans on Wednesday to increase the offered capacity in September to reach 40% of what it had scheduled before the crisis.

Analysts expect the national carrier to be removed from Germany’s benchmark blue-chip index DAX of which Lufthansa has been a constituent since the gauge’s inception in 1988.

Via Reuters

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