Consequences of Corona pandemic have a considerable impact on Lufthansa result

Adjusted EBIT declines to minus one.7 billion euros in the 2nd quarter despite major price reductions

  • Adjusted EBIT declines to minus one.7 billion euros in the 2nd quarter despite major price reductions
  • Comprehensive “ReNew” restructuring programme to guarantee global competitiveness immediately after the disaster
  • Lufthansa Cargo with powerful 2nd quarter
  • Quantity of workforce already minimized by eight,300 – redundancies no for a longer period dominated out in Germany as well
  • Normalization of need to pre-disaster level expected for 2024 at the earliest

The collapse in need for air travel owing to the Corona pandemic led to an 80 percent drop in earnings for the Lufthansa Team in the 2nd quarter to one.nine billion euros (prior calendar year: nine.6 billion euros). Most of the earnings (one.five billion euros) was generated by Lufthansa Cargo and Lufthansa Technik.

The Lufthansa Team Adjusted EBIT in the quarter under overview amounted to minus one.7 billion euros (prior calendar year: 754 million euros), in spite of in depth price reductions. Working charges ended up minimized by fifty nine percent, largely as a result of the introduction of limited-time doing work for massive areas of the workforce and the cancellation of non-vital expenses. Nevertheless, these actions ended up only partially equipped to compensate for the drop in revenue. The consolidated web profits of Lufthansa Team for the months April to June amounted to minus one.five billion euros (prior calendar year: 226 million euros).

The logistics division benefited from secure need. The loss of cargo ability in passenger aircraft (“bellies”) led to a major improve in yields. Lufthansa Cargo’s Adjusted EBIT as a result rose to 299 million euros (prior calendar year: minus nine million euros).

1st 50 percent of 2020 
In the complete to start with 50 percent of 2020, Lufthansa Team earnings fell by fifty two percent to eight.3 billion euros (prior calendar year: 17.4 billion euros). Adjusted EBIT amounted to minus two.nine billion euros (prior calendar year: 418 million euros) and EBIT to minus 3.five billion euros (prior calendar year: 417 million euros). The variation involving the two figures is largely owing to depreciation on aircraft and aircraft use rights amounting to 300 million euros, goodwill impairments totaling 157 million euros and the impairment of joint venture holdings in the MRO section totaling sixty two million euros.

In addition, the negative market place value enhancement of gas price hedging contracts had a negative impact of 782 million euros on the economic result in the to start with six months of the calendar year. When compared with the to start with quarter, this outcome decreased by 205 million euros. The Lufthansa Team web result for the to start with 50 percent of the calendar year as a result amounted to minus 3.6 billion euros (prior calendar year: minus 116 million euros).

Targeted visitors enhancement in the 2nd quarter of 2020
In the 2nd quarter of 2020, the Lufthansa Team airlines carried one.7 million travellers, ninety six percent fewer than in the prior calendar year. Ability fell by ninety five percent. The seat load variable was 56 percent, 27 percentage points under the prior year’s figure. Freight ability supplied fell by 54 percent owing to a absence of ability on passenger aircraft. The drop in freight kilometers marketed was 47 percent. This demonstrates an improve in cargo load variable by ten percentage points, to seventy one percent.

Targeted visitors enhancement in the to start with 50 percent of 2020
In the to start with six months, the Lufthansa Team airlines carried a full of 23.five million travellers, two thirds fewer than in the very same period of time previous calendar year (minus sixty six percent). Ability decreased by sixty one percent. The seat load variable fell by nine percentage points to 72 percent in the period of time. Freight ability supplied fell by 36 percent and cargo kilometres marketed by 32 percent. This resulted in an improve in cargo load variable by 4 percentage points to sixty six percent.

Funds stream and liquidity enhancement
Capital expenditure fell to 897 million euros (prior calendar year: one,904 million euros) in the to start with 50 percent of the calendar year, largely owing to suspending planned aircraft deliveries, with only 127 million euros of capital expenditure in the 2nd quarter. The drastic reduction in capital expenditure, the Team-huge emphasis on securing liquidity and rigorous doing work capital management constrained the funds outflow in spite of the major drop in earnings. The altered cost-free funds stream for the to start with 50 percent of the calendar year as a result amounted to minus 510 million euros (prior calendar year: 269 million euros). Web credit card debt elevated by ten percent as opposed with the conclude of 2019, to 7.3 billion euros.

Centrally readily available liquidity amounted to two.eight billion euros on June thirty, a reduce of one.4 billion euros as opposed with the conclude of the to start with quarter (31 March 2020: 4.two billion euros).

The resources agreed with the Economic Stabilization Fund of the Federal Republic of Germany (WSF) to stabilize Lufthansa Team are not nonetheless incorporated in the liquidity figures as of thirty June 2020. Which includes these resources amounting to nine billion euros, the Team had a full of eleven.eight billion euros in liquidity readily available as of thirty June 2020.

Since the commencing of July, the Team has been given two.3 billion euros from the stabilization bundle. As a result of the capital improve, with which the WSF has obtained a twenty percent stake in the company’s share capital, the Lufthansa Team been given funds of all over 300 million euros. The release of the to start with instalment of the KfW (Kreditanstalt für Wiederaufbau) loan contributed one particular billion euros, and the institution of the WSF’s Silent Participation II supplied a further more one particular billion euros.

Funds outflows since the stability sheet day linked largely to the payment of refund claims for cancelled flights. In July, the Team compensated out just under one particular billion euros. In full, the Team has so significantly reimbursed all over two billion euros to consumers in the latest calendar year 2020.

Lufthansa Team decides on “ReNew” restructuring software
The Team at this time expects need for air travel to return to pre-disaster concentrations in 2024 at the earliest. Lufthansa Team has for that reason resolved on a complete restructuring programme entitled “ReNew”, which also involves the restructuring software already underway at the airlines and support organizations.

The intention remains to preserve the global competitiveness and future viability of the Lufthansa Team. The software involves the reduction of 22,000 total-time positions in the Lufthansa Team. The Group’s fleet is to be completely minimized by at the very least a hundred aircraft. However, the ability supplied in 2024 is to correspond to that of 2019. To this conclude, productivity is meant to be elevated by fifteen percent by 2023, amid other things by reducing the range of the flight functions (AOCs) to a greatest of ten in future. The measurement of the Executive and Management Boards of the Team organizations will be minimized and the range of executives in the Team is meant to be reduced by twenty percent. In the administration of Deutsche Lufthansa AG, one,000 positions will be reduce. The sum of these actions need to make it feasible to refinance the resources of the stabilization bundle as promptly as feasible. The economic planning of Lufthansa Team stipulates that good funds flows will be generated once more in the training course of 2021. Lufthansa Team at this time (as of thirty June 2020) has 129,400 workforce, about eight,300 fewer than at the very same time previous calendar year. The Group’s goal was to keep away from redundancies as significantly as feasible. In opposition to the history of the market place developments in global air site visitors and dependent on the training course of the negotiations on vital agreements with the collective bargaining associates, this objective is no for a longer period realistically in just arrive at for Germany both.

Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG, reported: “We are encountering a caesura in global air site visitors. We do not expect need to return to pre-disaster concentrations just before 2024. Especially for long-haul routes there will be no speedy restoration.

We ended up equipped to counteract the results of the coronavirus pandemic in the to start with 50 percent of the calendar year with rigorous price management as well as with the revenues from Lufthansa Technik and Lufthansa Cargo. And we are benefitting from the to start with signs of restoration on vacationer routes, in particular with our leisure travel presents of the Eurowings and Edelweiss manufacturers. However, we will not be spared a significantly-reaching restructuring of our organization.

We are persuaded that the complete aviation market will have to adapt to a new normal. The pandemic presents our market a one of a kind opportunity to recalibrate: to query the status quo and, instead of striving for ”growth at any rate”, to build value in a sustainable and dependable way.”

Outlook
Since the commencing of July, the Team has further more expanded its flight software. This largely problems limited-haul leisure travel. Lufthansa Team had already made the expansion of its market place place in this section a focal point of its approach just before the Corona disaster. The airlines Eurowings and Edelweiss participate in an critical role in this context.

In July, the Team little by little elevated its presenting to all over twenty percent of the prior year’s level, with load aspects of around 70 percent in European limited-haul site visitors.

In the 3rd quarter, ability supplied is planned to improve to an average of all over 40 percent of the prior calendar year ability on limited- and medium-haul routes and to all over twenty percent on long-haul routes. In the fourth quarter, ability is planned to further more improve to an average of all over 55 percent (limited- and medium-haul) and all over 50 percent (long-haul). With this, the Team ideas to return to ninety five percent of the limited- and medium-haul and 70 percent of the long-haul locations by the conclude of the calendar year. Thanks to a large diploma of flexibility in supply and ability planning, this figure can also fluctuate at limited notice.

Despite the ability expansion, the Lufthansa Team also expects a obviously negative Adjusted EBIT in the 2nd 50 percent of 2020 and as a result a further more major drop in Adjusted EBIT for the total calendar year. This demonstrates the expectation that critical long-haul routes will proceed to be served only to a really constrained extent owing to ongoing travel limitations.

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