MIAMI – Lufthansa Group (LH) has announced major fleet and staff reductions for the mid-term as part of the third phase of its restructuring program.
Lufthansa will store eight Airbus A380 and ten A340-600 in the long-term. Additionally, it will permanently ground its remaining seven A340-600.
The group already retired six A380 in the Spring. Now, the slow air traffic recovery has again changed its plans. As a result, it foresees a permanent group-wide capacity reduction of 150 aircraft for 2025. The move also applies to its wet-leased aircraft.
According to the carrier’s latest figures, the value of its long-term parked and scheduled-to-be grounded aircraft will be damaged by up to €1.1bn in Q3. Thus, the expectation that the production level would reach 50% as that of 2019 is no longer viable. In fact, LH foresees that its ASK would be about 20-30% compared to that of 2019 if the current air travel trend continues.
The group will also increase staff dismissals. Permanent staffing levels will be based on flight operations adjustments according to market development.
Previously, the airline announced some redundancies due to a personnel surplus of about 22,000. However, the group now seeks to further reduce cash outflows through strict cost management; hence, the new staffing policy. Staff negotiations on the crisis packages are ongoing with unions to limit the dismissals.
Staff reductions will also affect management positions by 20% in Q1 2021. Additionally, a review of worldwide administrative office space with a 30% reduction of the latter in Germany will add further cuts to toLH’s workforce.
By taking all of these measures, the group expects to reduce its liquidity outflow. Then, this will down from €500m per month to €400m in winter 2020/2021.
Featured photo: Lufthansa Airbus A380. Photo: Konstantin von Wedelstaedt.