Ukraine war makes Lufthansa difficult to restart

Created: 03/03/2022Updated: 03/03/2022 14:18

An airplane landing.

© Boris Roessler/dpa/symbol image

After the crisis is before the crisis: The Ukraine war and possible bottlenecks in the summer are clouding over the situation for Lufthansa, which actually wants to make a strong restart after the pandemic.

Frankfurt/Main - Long detours to the Far East, a lack of passengers and rising oil prices: the consequences of the Russian attack on Ukraine have also left their mark on Lufthansa.

After losing billions again last year, the company has just got ready for a brilliant restart after the pandemic.

In view of the uncertain situation, the MDax group does not even want to hold out the prospect of returning to the profit zone.

On a normal Thursday in March, the airline would have brought 4,000 people to and from Russia and Ukraine, said CEO Carsten Spohr when presenting the balance sheet.

But there is war.

No plane connects people, cultures and economies: "Our thoughts are with the women, men and children in Ukraine," assures the Lufthansa boss before he talks about his company's business prospects.

They actually looked positive for the crane after two costly pandemic years.

On medium-haul routes, he expects 95 percent of the pre-crisis supply in the summer.

Lufthansa wants to leave the crisis behind mentally and commercially.

“We are very sure that air traffic will experience a strong upswing this year.

People want to travel again,” says Spohr, a week after the outbreak of war.

There was a short-term setback in flight bookings, which had been booming until then, and the airspace closures over Russia and Ukraine also lead to single-digit million losses per month.

Around 90 flights a week and maintenance contracts will be eliminated.

The Far East machines have to fly long detours because of the closed airspace.

Spohr and his CFO Remco Steenbergen prepare the audience for rising ticket prices.

The most important driver is the sharp rise in oil prices, but airports and air traffic control have also increased their fees.

Spohr also doubts that the “system partners” are adequately prepared for the expected influx of customers in summer because they would have lost too many staff during the Corona period.

The Lufthansa Group itself has stopped downsizing at around 105,000 employees and is already hiring again in some areas.

That is 33,000 fewer jobs than before the Corona crisis.

In Germany alone, around 10,000 people are leaving the company.

The future of around 400 pilots is still being wrestled with the Vereinigung Cockpit trade union.

Spohr was ready for further investments in Europe.

Plans have gone furthest for Alitalia's successor ITA, whose books Lufthansa and the major shipping company MSC will be able to look at in the coming days.

Lufthansa is initially aiming for a minority stake, from which one will see what develops from it "over time", said the Lufthansa boss.

He expressly mentioned the companies Austrian and Brussels Airlines, in which Lufthansa had become the majority shareholder in several steps.

In the second Corona year 2021, the group was able to significantly limit its losses.

The German state aid has been repaid, while the credit lines of Switzerland, Austria and Belgium have not yet been decided.

Thanks to a record profit in the Lufthansa Cargo freight division and an initial recovery in the passenger business, the bottom line deficit fell by two thirds to around 2.2 billion euros.

Sales recovered by a quarter to 16.8 billion euros, but did not even reach half of the pre-crisis year 2019. Last year the group counted around 47 million passengers - around 29 percent more than in the first Corona year, but almost 100 million fewer than in 2019.

While the passenger business was in the deep red, things were going brilliantly for Lufthansa Cargo: Thanks to high demand, tight capacities and the resulting high freight prices, the logistics subsidiary earned almost 1.5 billion euros in day-to-day business, more than ever before.

With persistent problems in the supply chains of companies, the prospects are excellent again this year, especially since the Russian Air Bridge Cargo, an important competitor, has been excluded from the world market by western sanctions.

The maintenance subsidiary Lufthansa Technik and the catering division LSG also returned to profitability in 2021.

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Business in the first quarter was still shaped by the omicron variant of the corona virus, which had triggered new travel restrictions and a slump in demand.

For the year as a whole, the Executive Board plans to continue offering flights of more than 70 percent of the pre-crisis level, which will probably not be reached again until the middle of the decade.

In the summer, 650 jets are expected to be back in the air from the 763 planes, Spohr announced.

Next year it should be 700.

The fleet will be replaced faster and thus more environmentally friendly.

Lufthansa is also looking at aircraft that have been ordered by the Russian Aeroflot and are now not allowed to be delivered.

dpa