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Sunday, December 27, 2020
Liquidity higher than expected
Lufthansa cuts costs in half
The Corona rescue package for Lufthansa comprises nine billion euros. So far the group has only called in a third of the money, the financial situation is better than expected due to massive job cuts. Among other things, the state loan is intended to increase the pilots’ short-term work assignment.
Thanks to its austerity course in the Corona crisis, Lufthansa achieved a significant cost reduction. “This year we lost two-thirds of our sales, but we were able to cut costs in half,” said Lufthansa boss Carsten Spohr of “Welt am Sonntag”. Therefore, the liquidity of the group hardest hit by the pandemic is “higher than expected.”
Of the nine billion euros in Crown rescue packages from Germany, Austria, Switzerland and Belgium, “we have only requested three billion euros so far and we have not yet spent much of it,” Spohr said. In November, the airline was able to go public again. Further development in business will show “how much we really need of the nine billion euros.”
There are no signs of a new financial crisis in 2021. “With around € 10 billion of liquidity available and sufficient reserves on the balance sheet, I can rule out debt overhang from today’s perspective,” Spohr said. Lufthansa had agreed comprehensive savings packages with the unions in the crisis. “Among other things, 29,000 employees will have left us by the end of this year, unfortunately one in five Lufthansa employees,” said the head of the airline “Welt am Sonntag”. The goal is to keep 100,000 employees in the company. “But those can’t be full-time jobs in all areas.”
The airline is also using the $ 1 billion government loan to significantly increase the pilot’s short-term job assignment. Spohr confirmed to “Welt am Sonntag” that, for example, the monthly allowance for short-term work for captains of the ex-A380 will be increased from around 5,000 to up to 15,000 euros. With the pure short-term work allowance, the “monthly basic wage would be cut in half” because a large part of the wage is above the income threshold. “We can’t and we don’t want to expect our drivers to do that,” Spohr said.
