In the face of ballooning losses alongside a pandemic outbreak that has been inflicting deeper wounds into the travel and tourism industry, the German aviation industry Goliath, Lufthansa had promised a swathe of revamps ranging from expense cuts to job slashes to sales of non-core businesses, as the bloc’s second-largest carrier has been on the lookout of repaying a €9 billion in state bailout package in form of debts and vying to vent out a way to limit its extent of losses.
In point of fact, the second-largest German carrier’s recent promises to slash expenses came forth as the aviation industry giant had reported a net loss of €2.1 billion during its first quarter on Wednesday, just days after the carrier had agreed to a Government bailout package in exchange for 20 per cent stake in the company alongside allotments of some of its landing slots to the rivals.
If truth is to be told, the havoc-scale first-quarter losses of Lufthansa, was largely prompted by write-downs of nearly €266 million of its fleet, while the write-downs on its book-values worth of €100 million and €57 million on LSG North American and budget carrier Eurowings respectively had added to further strains.
Aside from that, an en-masse slump in fuel hedging contracts costing another €950 million had bottomed the losses of the second-largest European carrier.
Lufthansa looks to far-reaching revamps amid sluggish recovery in demands
Meanwhile, followed by the reveal of its €2.1 billion in first-quarterly losses, citing that the aviation group with 300 operating fleets and 200 destinations alongside long-hailed subsidiaries such as Swiss, Brussels and Austrian Airlines, had been bracing for a substantial scale of decline in 2020 earnings, Lufthansa Chief Executive Carsten Spohr said on Wednesday morning, “In view of the very slow recovery in demand, we must now take far-reaching restructuring measures.
” On top of that, Lufthansa’s Brussels Airlines would reduce the size of its fleet by 30 per cent and workforce by 25 per cent and Austrian airlines would slash fleet-size and jobs by 20 per cent as part of a Lufthansa’s broad-based overhaul, while the group was also seeking to sale its non-core assets in a medium-term, added Spohr in a post-earnings’ call.