Lufthansa: Flight program reduced due to corona virus crisis

The severe restrictions caused by the corona virus crisis have massive consequences for Lufthansa and its subsidiaries, such as Swiss. The group is financially very solid, but German media are already speculating about possible government aid.

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Deutsche Lufthansa is tightening the measures to counter the immense burdens from the coronavirus crisis. As the company announced late on Friday evening, the Management Board decided to suspend the dividend payment for the 2019 financial year. In addition, the flight program will be further reduced in the coming weeks by up to 70% compared to the original plans. The group also cuts material and project costs, plans to introduce short-time work and is negotiating the postponement of planned investments.

Liquid funds of over 4.3 billion euros

Lufthansa, whose subsidiaries include Swiss, Austrian Airlines and Brussels Airlines, points to its strong financial position. The group has raised additional funds of € 600 million in recent weeks. He thus has liquid funds of € 4.3 billion and unused credit lines of € 800 million. As the company also announced, adjusted earnings before interest and taxes (Ebit) in 2019 were around € 2 billion, the Ebit margin was 5.6%. On March 19, the company publishes the full business figures for 2019 and provides an outlook for the current year.

The crisis is a very extraordinary burden for the entire group. In the past week, the number of new bookings with the Group airlines was around 50% below the level of the same date in 2019. In addition, the company recorded a significantly increasing number of flight cancellations.

Meeting with the German government on Monday?

On Friday, German media had also speculated that Lufthansa could apply for government aid and at the same time was considering largely stopping flight operations for a while. The former is largely about government liquidity support. In an internal video message, chief executive Carsten Spohr is said to have informed employees that the government in the home markets of Germany, Switzerland, Austria and Belgium was talking about possible state aid, according to “Handelsblatt”. Federal aviation coordinator Thomas Jarzombek has invited the industry to a meeting next Monday to discuss the consequences of the virus and the government’s offer to help businesses.

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