Lufthansa is to cut more full-time jobs and retire additional aircraft, it announced on September 21 in its third restructuring program. An unspecified number of extra jobs will be lost, on top of the 22.000 full-time equivalents reported in April and July.
The reductions follow a further analysis of the airline’s position and the rate of recovery of the air travel industry. Lufthansa hoped to operate at 50 percent capacity in Q4 but expects to reach only 20-30 percent as the Covid-crisis continues. “The change in permanent staffing levels within flight operations will be further adjusted in regards to market development. The compensation and reduction of personnel surplus will be discussed with the responsible employee representatives”, the executive board says in a press release. The board adds that it wishes to keep forced redundancies to a minimum.
As a result of the slower than anticipated recovery, Lufthansa is forced to park more aircraft. It will place eight Airbus A380s and ten A340-600s in deep storage while permanently retiring seven -600s. They will only be activated if there is an unexpectedly rapid recovery of the market, which seems highly unlikely as travel restrictions caused by the coronavirus are extended or renewed. The airline will take a EUR 1.1 billion impairment on the stored aircraft in its Q3-results.
Lufthansa will early-retire seven Airbus A340-600s. The type was introduced in 2003. (Lufthansa)
Ahead of the executive board meeting, it was expected that Lufthansa was to retire all remaining eight A380s permanently as well as eight remaining Boeing 747-400s, all A340-600s, and most A340-300s. In April, it announced the early retirement of the first six A380s that was originally scheduled for 2022.
Instead of a complete end of the A380 at Lufthansa, the airline keeps the door open for the type. It hasn’t announced any plans for the oldest 747s, of which five already have been placed in deep storage at airports in Germany and The Netherlands. Lufthansa now plans to reduce its fleet by 150 aircraft by 2025. The nineteen Boeing 747-8s will stay, although currently only eight of them are active.
The decision to store the A380s doesn’t come as a surprise. At the Q2-results presentation in August, CEO Carsten Spohr said the executive board would decide on the future of the long-haul fleet before the end of Q3. Without any sign of a quick recovery of the long-haul segment and going into the weak winter season, there is no immediate future for the A380 with Lufthansa.
The third restructuring package also includes further cost savings. Monthly cash burn is to come down from EUR 500 million to 400 million by the coming Winter season. Lufthansa still plans to return to positive cash flow during the next year, in which it will reduce the number of management positions by twenty percent and office space by thirty percent.