Lufthansa posts record loss, calls for end to travel bans and quarantine
Germany's Lufthansa Group (LHA.DE) posted a record loss for 2020 amid the pandemic, in a year in which it let go of 20% of its employees, as its CEO called for an end to travel bans and quarantine and hoped the global vaccine rollout would mean an uptick in demand for flying.
Shares of the company were down roughly 2% Thursday morning.
The group posted an operating loss of €5.5bn ($6.6bn, £4.7bn) for the full year, compared with a €2bn profit in 2019, the worst loss in its history.
Revenue fell to €13.6bn in 2020, down from €36.4bn in 2019, with operating cash drain in Q4 2020 of around €300m per month.
CEO Carsten Spohr described 2020 as “the most challenging in the history of our company – for our customers, our employees and our shareholders.”
“Travel restrictions and quarantine have led to a unique slump in demand for air travel. Now internationally recognised, digital vaccination and test certificates must replace travel bans and quarantine,” he added.
He remained hopeful about the future: “from the summer onwards, we expect demand to pick up again as soon as restrictive travel limits are reduced by a further roll-out of tests and vaccines.”
“We are prepared to offer up to 70% of our pre-crisis capacity again in the short term as demand increases,” he said.
The company said that at year-end 2020, the number of employees was 110,000, about 20% lower than the previous year. In Germany, it could cut a further 10,000 jobs.
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In the second half of 2020, Lufthansa, which includes brands such as Austrian, Brussels, Swiss and Eurowings, returned to the capital market and raised funds of €2.1bn via bonds and aircraft financing, and said it is “well financed beyond 2021.”
In 2020, the airlines of the Lufthansa Group offered around one third of the flights or a capacity of 31% compared with the previous year. At 36.4 million, the number of passengers was 25% of the previous year's figure.
The group said it will permanently retire roughly 100 aircraft and by the middle of the decade, it expects capacity level to return to 90%.
Lufthansa said it expects operating loss to be lower in 2021 than in the previous year.
The pandemic has taken a major toll on the travel industry. Last week, IAG (IAG.L), the owner of airlines like British Airways, Aer Lingus, and Iberia, said it had lost €7.8bn in 2020..
It made a pre-tax loss of €7.8bn on income of €7.9bn in 2020. The company made an operating loss before exceptional costs of €4.4bn, which was in-line with forecasts.
While parts of Europe are beginning to consider routes out of lockdown, the prospect of international travel remains uncertain. The UK government said this week that a committee was assessing whether to allow overseas travel, with a verdict due on 12 April.
