In 2019, the group invested 3.6 billion euros (previous year 3.8 billion euros), a large part of it in new aircraft.
By Our Correspondent
March 19, 2020: Except for cancellations to mainland China, Lufthansa Cargo will continue to fly its regular programme, keeping the entire freighter fleet in the air. This currently consists of seven B777Fs, six MD11Fs and four B777Fs from Aerologic (a joint venture between DHL Express and Lufthansa Cargo). In addition, the company is currently examining the possibility of using passenger aircraft as pure cargo aircraft in order to further increase cargo capacity. Even the group is making every effort to ensure that supply chains in Germany and Europe do not come to a standstill.
In 2019, the group invested 3.6 billion euros (previous year 3.8 billion euros), a large part of it in new aircraft, as per the group’s release.
Carsten Spohr, chairman of the executive board of Deutsche Lufthansa AG stated, “The spread of the coronavirus has placed the entire global economy and our company as well in an unprecedented state of emergency. We have to counter this extraordinary situation with drastic and sometimes painful measures. At the same time, we must live up to the special responsibility that airlines bear in their home countries. We are doing everything we can to bring as many passengers as possible home on relief flights. In addition, we are doing our utmost to help ensure that supply chains for many thousands of businesses do not break down by mobilising additional capacity for air freight transport. The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid. In view of the massive impact of the Corona crisis, our results published for the past financial year is unfortunately sidelined.”
The most important key figures of the 2019 annual financial statements have already been reported in an ad hoc announcement on March 13.
At 2 billion euros, the adjusted earnings before interest and taxes (EBIT) of the Lufthansa Group was in line with the forecast despite considerable charges. The main drivers for the decline were a 600 million euro increase in fuel costs and a noticeable economic slowdown, especially in the group’s home markets. Earnings development was also impacted by high price pressure in the European market due to overcapacity and the weakening of the global air freight market. Lufthansa Group revenue in 2019 rose by 2.5 percent to 36.4 billion euros (previous year 35.5 billion euros). The adjusted EBIT margin was 5.6 percent (previous year 8 percent). Consolidated net profit fell by 44 percent to 1.2 billion euros (previous year 2.2 billion euros).
In order to secure its strong financial position, the Lufthansa Group has raised additional funds of around 600 million euros in recent weeks. In actuarial terms, the group thus has liquidity of around 4.3 billion euros. In addition, there are unused credit lines of around 800 million euros. Further funds are currently being raised. Among other things, the group will use aircraft financing for this purpose.
Lufthansa will discontinue its long-haul operations in Munich and will initially only offer long-haul flights from Frankfurt. SWISS will offer only three weekly long-haul flights a week to Newark (US) in addition to a substantially reduced short- and medium-haul schedule. Lufthansa’s short-haul programme will also be substantially reduced further, and only Lufthansa CityLine services will be operated from Munich. From the hubs in Frankfurt, Munich, and Zurich, only a few European metropolitan areas will be served. The relief flight schedule runs until April 19 and only provides for a total of about five percent of the originally planned programme. Around 700 of the Lufthansa Group’s 763 aircraft will be temporarily parked.
“The Lufthansa Group is financially well equipped to cope with an extraordinary crisis situation such as the current one. We own 86 percent of the group’s fleet, which is largely unencumbered and has a book value of around 10 billion euros. In addition, we have decided to propose to the annual general meeting that the dividend payment is suspended, and we are proposing short-time working in our home markets,” said Ulrik Svensson, chief financial officer of Deutsche Lufthansa AG.
Due to entry restrictions in many countries and a collapse in demand, the group was forced to make drastic cutbacks in its flight operations. Air Dolomiti conducted its last flight on March 18. The last regular scheduled flight of Austrian Airlines landed in Vienna on March 19. With the exception of special flights, Austrian Airlines is suspending its flight operations until March 28. Brussels Airlines will not be offering any regular flights in the period from March 21 to April 19.
In order to bring as many people as possible back home quickly, Lufthansa Group airlines are also operating numerous special relief flights around the world. In close consultation with the governments of their home countries and on behalf of tour operators, Lufthansa Group airlines are currently offering around 140 special relief flights. More than 20,000 passengers are thus flying home with Lufthansa, Eurowings, SWISS, Austrian Airlines, Brussels Airlines, and Edelweiss.
