In view of the corona virus, Lufthansa is breaking demand. For this reason, shareholders should not receive a distribution for the past financial year. The group wants to remain liquid in the crisis.
Deutsche Lufthansa plans to forego a dividend for the past financial year due to the corona virus crisis. In addition, the airline, which was badly hit by the pandemic, expects a significant drop in earnings in 2020. The Lufthansa Executive Board had decided to propose to the Annual General Meeting to suspend the dividend payment for the 2019 financial year, the company listed on the Dax announced on Friday evening.
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The Lufthansa Group closed 2019 with adjusted earnings before interest and taxes (adjusted EBIT) of EUR 2.026 billion. Despite measures to limit the financial impact of the coronavirus crisis, the group expects EBIT 2020 to be significantly below the previous year. The adjusted EBIT margin was 5.6 percent last year and thus within the range of 5.5 percent to 6.5 percent forecast in June 2019.
According to Lufthansa, the flight program will be further reduced in the coming weeks by up to 70 percent compared to the original plan. In addition, the group is reducing material and project costs, intending to introduce short-time work and negotiating the postponement of planned investments.
State aid is not excluded
The proposal not to pay a dividend for the 2019 financial year reflects the focus on securing liquidity. The Group’s fundamental policy of distributing 20 to 40 percent of net profit remains unaffected. To secure its financial position, the group claims to have raised additional funds of around EUR 600 million in recent weeks. The group currently has liquid funds of around 4.3 billion euros. In addition, there are unused credit lines of around 800 million euros. On March 19, Lufthansa wants to report in detail on the business development in 2019 and the outlook for the current year.
Lufthansa CEO Carsten Spohr had previously addressed the employees in a video message and said that the effects of the crisis were becoming more and more dramatic. The airline is considering state aid to further aggravate the corona crisis. Airlines are particularly hard hit by the corona shock to the economy. With massive cancellations of flights to Asia, within Europe and from the weekend also to the United States, more and more business is breaking away. Lufthansa is already tackling the biggest crisis in the history of aviation by cutting costs.
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