Lufthansa warned that it will not come close to pre-crisis levels of traffic until at least the middle of the decade, after the airline slumped to the worst loss in its history in 2020.
The German group, which includes brands such as Austrian, Brussels, Swiss and Eurowings, made an operating loss of €5.5bn for the full year, after global travel bans to combat the coronavirus pandemic decimated passenger demand. This compared with a €2bn profit in 2019. Lufthansa is burning through €300m cash per month.
Its logistics unit, Lufthansa Cargo, which is involved in vaccine distribution, achieved pre-tax earnings of €772m, as prices for cargo capacity rose sharply due to the grounding of passenger aircraft, which also carry freight.
Lufthansa’s results come a week after IAG, the owner of British Airways, slumped to its worst-ever annual operating loss, of €7.4bn. The rival group also said it was burning through €185m cash per week.
Despite the worldwide vaccine rollouts, global passenger traffic was down 72 per cent in January, when compared with the same month in 2019, according to industry body Iata.
In an effort to entice more travellers, Lufthansa, which flew 76 per cent fewer passengers in 2020 than the year before, recently extended its free rebooking period to the end of May.
“Internationally recognised, digital vaccination and test certificates must replace travel bans and quarantine so people can once again visit family and friends, meet business partners or learn about other countries and cultures,” said chief executive Carsten Spohr.
Lufthansa, which plans to permanently retire roughly 100 aircraft, said it expected its capacity level “to return to 90 per cent” by the middle of the decade, but warned that it would probably end 2021 having offered just 40 to 50 per cent of its 2019 capacity.
In the short term, however, Lufthansa said it was “prepared to offer” up to 70 per cent of its pre-crisis capacity to meet resurgent demand.
“We expect demand to pick up again as soon as restrictive travel limits are reduced by a further rollout of tests and vaccines,” Spohr said.
The carrier, which employed almost 140,000 people before the pandemic, has already cut almost 30,000 jobs, and said it would have to axe roughly 10,000 more in Germany.
Last June, the Frankfurt-based airline received a rescue package worth €9bn from governments in Austria, Switzerland, Belgium and Germany. Berlin also took a 20 per cent stake in Lufthansa, and nominated two people to its supervisory board.
At the end of last year, Lufthansa Group had about €10.6bn of liquidity, including €5.7bn that remained undrawn from the bailout package.