Lufthansa Retires Superjumbos as Pandemic Hastens Airlines’ Quest to Fly More Efficient Jets
Lufthansa is bidding auf wiedersehen to the Airbus A380s, as the group joins the growing list of airlines retiring the superjumbos in favor of smaller, more efficient models as they recover from the coronavirus pandemic.
Speaking during the group’s fourth-quarter earnings call on Thursday, CEO Carsten Spohr confirmed that Lufthansa has “permanently decommissioned” its 14 A380s, as well as its 10 Airbus A340-600s and Boeing 747-400s, as part of its Covid-19 fleet restructuring. Further group changes will include phasing out Airbus A330-200s and A340-300s, and Boeing 767-300ERs and 777-200s as part of a push to slash 100 jets from its 757 aircraft-strong fleet by mid-decade.
The fleet changes will affect every group airline, including Austrian Airlines, Brussels Airlines, Eurowings, Lufthansa and Swiss International Air Lines. Austrian will lose about a quarter of its fleet, including its 767s, and Brussels as much as a third.
In a vote of confidence in Boeing, Lufthansa listed the 20 777-9s that it has on order as part of the “new normal” for its long-haul fleet. The 777X program has faced repeated delays with the planemaker pushing entry-into-service to 2023 in February — almost four years later than originally planned.
Lufthansa is far from alone taking a scalpel to its long-haul fleet. Air France has retired its A380s, British Airways and Qantas Airways their 747s, and Delta Air Lines its Boeing 777s to name a few. The retirements were among the largest models at each of these airlines, a segment that is uniformly forecast to remain soft for some time to come.
Long-haul travel is forecast to come back last in the International Air Transport Association (IATA) forecast of a global recovery in air travel by 2024. Domestic and shorter-haul flying is expected to come back first with longer-haul international trips coming later, in part due to continued travel restrictions in many countries.
Lufthansa Group reported a €6.7 billion ($8.1 billion) net loss in 2020. Revenues fell 63 percent to €13.6 billion during the year. Cargo was the one bright spot with Lufthansa logistics revenues rising 11 percent to €2.8 billion. Passenger traffic fell 75 percent on a 69 percent drop in capacity.
“2020 was dominated by the crisis,” said Spohr. “2021 will be marked by modernization, transformation and redimensioning of the Lufthansa Group.”
In addition to the major fleet changes, that “redimensioning” of will mean operating differently. Renegotiated labor agreements allow all of the group’s airlines to serve the once off-limits inner sanctum of Lufthansa: Its Frankfurt and Munich hubs. This means higher-cost Lufthansa can cede, for example, leisure-heavy Mediterranean routes to budget arm Eurowings. This is already on display with lower-cost Brussels’ plan to take over select Brussels-Frankfurt flights from Lufthansa this summer.
However, the planned changes will take a toll. The group aims to shrink its workforce to around 100,000 staff by mid-decade, said Spohr. Employee numbers stood at 110,000 at the end of 2020 after staffing was cut by about 20 percent last year.
This year, Lufthansa plans to recover to about 40-50 percent of 2019 capacity. While 2021 is starting out slow — capacity will be at roughly 20 percent levels in the first quarter — the ramp up is forecast to accelerate in the second quarter, said group chief financial officer Remco Steenbergen on Thursday. The aim is to fly about half of 2019 capacity this summer.
Of course to do this, travel restrictions need to ease. Spohr noted that bookings track closely to what happens in destinations and less the restrictions Germany and the group’s other home countries.
“Greece, Spain announcing that they will be open for business, that’s what’s driving our bookings,” he said.Subscribe Now to Airline Weekly