Lufthansa Group yesterday published its preliminary first quarter results, showing a loss of around €1.2 billion, and gave a stark warning about its solvency over the coming weeks.
The group said that despite available liquidity of around €4.4 billion, “in view of the business outlook, existing multibillion liabilities related to trade payables and refunds of cancelled tickets as well as upcoming repayments of financial liabilities, the Group expects a significant decline in liquidity in the coming weeks”.
“The Group does not expect to be able to cover the resulting capital requirements with further borrowings on the market,” it added. “The Group is therefore in intensive negotiations with the governments of its home countries regarding various financing instruments to sustainably secure the Group’s solvency in the near future.”
The Lufthansa Group comprises member carriers Austrian Airlines, Brussels Airlines, Lufthansa and Swiss, as well as subsidiaries including Eurowings and Edelweiss Air.
The group said that in March alone revenue declined by almost €1.4 billion or 47 per cent, adding that “Cost reductions could only partially offset the revenue decline in the quarter”.
“At present, it is not possible to foresee when the Group airlines will be able to resume flight operations beyond the current repatriation flight schedule.
“The Group therefore expects a considerably higher operating loss in the second quarter compared to the first quarter.”
Lufthansa has already begun the process of decommissioning several aircraft, including its entire fleet of A340-600s.
Austrian has also announced plans to retire half of its B767 fleet, with CCO Andreas Otto stating:
“The entire airline industry is pessimistic. We have to assume that we will reach the ‘pre-corona level’ again in 2023 at the earliest.”