Lufthansa Forecasts Slower Recovery
What happened to the green shoots of recovery that so many European airlines saw in the late spring and early summer? It’s safe to say they’ve withered as the summer travel season winds down. Lufthansa today updated its capacity guidance, fleet and employment plans, and they’re not pretty.
The German behemoth now says its capacity plans for the fourth quarter will be between 20-30% of last year’s levels. This is down markedly from earlier this year, when the airline said its fourth-quarter capacity plans would be about 50% of last year’s. “The outlook for international air traffic has significantly worsened in recent weeks,” Lufthansa said in a statement. “With the summer travel season coming to an end, passenger and booking figures are declining again, after slight signs of recovery were still evident in July and August.”
Lufthansa previously had announced that it could cut as many as 22,000 jobs. The company now says that number is likely to be revised up, particularly among its flight crew. The carrier said it will begin talks with its unions about new reductions in force. Management ranks are expected to be cut by 20%.
In terms of its fleet, Lufthansa is putting eight Airbus A380s in long-term storage, after permanently removing six of the type from its fleet earlier this year. It has already decommissioned seven Airbus A340-600s and will put another 10 in long-term storage. The A380s and A340-600s now going to long-term storage can be added back to the fleet “in the event of unexpectedly rapid market recovery,” Lufthansa said.
Further “short-term adjustments” may be unavoidable as air traffic demand remains uncertain, Lufthansa said. The carrier reiterated its stance that more testing for the coronavirus is necessary to assure passengers of the safety of flying. The current patchwork of quarantines is depressing travel demand, it said.
Lufthansa’s revised guidance further illustrates how tough it is for the large intercontinental carriers that staked their fortunes on premium business traffic. That market is virtually gone now. The airlines that are succeeding are those best positioned to capitalize on leisure and family-visit traffic. European low-cost carrier Wizz Air, in fact, is expanding its footprint at some airports, including London Gatwick, as the giants retrench.
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