Company reports an ‘unprecedented’ quarterly loss as global flight travel comes to virtual standstill due to coronavirus pandemicDeutsche Lufthansa signalled it would make sweeping job cuts and sell off noncore units to repay aEurope’s biggest airline will slash employee expenses and look at spinning off noncore units to reduce costs and bolster cash flow as the coronavirus crisis depresses revenue, it said in a statement on Wednesday. The group had a €2.1bn net loss in the first quarter.
While other European carriers are also cutting back, Lufthansa’s situation may be complicated by the state’s pending 20% holding in the airline, which will see government representatives involving themselves in its affairs. “The scale of the restructuring is immense, and agreement with unions on drastic reductions in staff numbers, wages or both will be difficult to achieve,” said Daniel Roeska, an analyst with Sanford C Bernstein.Spohr’s bid to sell noncore units won’t be easy either, judging by Lufthansa’s past spin-off attempts. A push to divest its LSG Sky Chefs catering arm met repeated delays before an agreement was reached to sell the European division to Gate Group Holding.
Airlines worldwide are reeling as the Covid-19 pandemic brings decades of travel growth to a shuddering halt. Industry executives are cutting back the workforce given demand could take several years to return to previous levels.
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