Deutsche Lufthansa reined in capacity plans for the early summer as a surge in coronavirus cases coupled with Europe's slow rollout of jabs pushes a hoped-for travel rebound later into the peak season.
Lufthansa now expects to offer only 40 per cent of its pre-pandemic capacity for 2021 as whole, according to a statement Thursday, a figure that's below the level the German airline group has said is needed to generate positive cash flow. The operating loss for the first quarter was €1.1 billion.
Airlines across Europe are wrestling with an uncertain outlook as countries work toward a reopening, aided by plans to introduce so-called vaccine passports, while continuing to battle the latest surge in the pandemic. The International Air Transport Association last week forecast that the region will be the slowest worldwide to reduce losses this year.
Lufthansa chief executive Carsten Spohr said that with travel restrictions still in place in most parts of the world, a "significant market recovery" won't come until the second half as vaccination programs progress, with only a gradual pickup in demand expected before then.
The airline said its cash drain in the first quarter shrank to €235 million a month, aided by a strong cargo market. Lufthansa previously said it expected outflows to be no more than €300 million, the average for the fourth quarter. The figure should drop to €200 million this quarter.
Spohr has said the carrier needs to use an “inevitable restructuring” to boost efficiencies in order to ride out the crisis. Lufthansa will on Tuesday ask investors to back a €5.5 billion capital increase as a step toward removing the German state as its biggest shareholder after a €9 billion bailout.
Lufthansa reiterated that it expects a lower operating loss for the current fiscal year.– Bloomberg