Lufthansa trims flight capacity outlook on slower recovery

Monday, 3 May 2021 01:34 - - {{hitsCtrl.values.hits}}

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BERLIN (Reuters): Lufthansa lowered its capacity forecast for flights this year as hopes dwindle for an early summer travel rebound, but the German airline’s cost-cutting drive narrowed quarterly losses.

The group, which includes Austrian Airlines, Swiss and Eurowings, also stepped up warnings to German unions that it is ready to use forced dismissals to cut more jobs.

The travel industry has suffered many false starts to a hoped-for recovery, beset by new restrictions, virus variant outbreaks and a sluggish European vaccine rollout.

Lufthansa said it expects to fly at about only 40% of its pre-pandemic capacity in 2021, trimming the 40%-50% guidance issued less than two months earlier.

The group predicted a gradual demand pick-up in April-June and a “significant market recovery” in the second half, citing moves by the European Union towards opening up transatlantic travel to vaccinated US visitors.

“We know that bookings shoot up wherever restrictions are loosened and travel becomes possible again,” Chief Executive Carsten Spohr said.

Lufthansa’s quarterly sales came to 2.6 billion euros, down 60% on a year-earlier period that was only partially impacted by the onset of the pandemic.

The adjusted loss before interest and taxes (EBIT) narrowed by 30% to 1.14 billion euros in the first quarter, helped by a 19% workforce reduction and 51% decline in operating expenses, while the net loss halved to 1.05 billion.

Both earnings numbers beat expectations, based on the median analyst estimates in company polling. Free cash flow came in at a negative 235 million euros per month, also better than the monthly 300 million euro cash burn previously flagged.

Lufthansa has 10,000 excess full time-equivalent German staff after 8,000 departures and will “address this personnel surplus” in 2021-2, finance chief Remco Steenbergen said.