Deutsche Lufthansa AG is preparing for more drastic cutbacks in its global workforce and airline fleet than it previously planned, after a hoped-for recovery of air traffic fizzled out.
COVID-19-related rules that have forced travelers into quarantine have had a catastrophic effect on bookings, Lufthansa chief executive Carsten Spohr told staff at a meeting on Tuesday, people who were in attendance said.
Seat reservations for next month stand at less than 10 percent of levels seen a year earlier, said the people, who asked not to be named as they were discussing comments that were not made publicly.
Photo: Reuter
A surge in European virus cases has forced Europe’s biggest airline to tear up its recovery plan and pare back its ambitions to cope with the deteriorating outlook.
Lufthansa, which accepted a 9 billion euro (US$10.7 billion) German bailout in early June, now expects a recovery of air traffic to take until the middle of the decade.
It is not clear when — if at all — revenue might recover to its record last year, given a decline in business travel that has hit Lufthansa hard, the people cited Spohr as saying.
Spohr said that he is working on measures that would go beyond the existing plan to cut Lufthansa’s fleet by about 100 jets and shed the equivalent of 22,000 full-time positions, as the earlier program would not be enough, the people said.
Beyond short-term cuts, the airline would take steps to increase the focus on customers and to become more sustainable, Spohr reportedly said, as Lufthansa’s managers establish priorities extending well beyond the pandemic.
While Lufthansa had planned to lift capacity gradually to about half of normal levels by December — a forecast included in investor presentations as recently as last week — Spohr said he would probably be satisfied if Lufthansa could offer 25 percent of the number of seats offered a year earlier, the people said.
At the moment, traffic stands at less than 20 percent of last year, the people said.
No final decisions have been made, a spokesman for Lufthansa said.
Spohr dismissed reports that Lufthansa would cut as many as 42,000 jobs as “way too high,” the people said.
Nevertheless, the German airline’s management would propose to its supervisory board a figure that is higher than the 22,000 positions it had planned to shed, they said.
The company also plans to decide next week which four-engine wide-body aircraft it might hold on to, the people said.
A commitment to environmentally friendly technology could factor into the decision.
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