The Lufthansa Group has released preliminary Q1 results,
revealing the impact of the coronavirus has led to a 47 per cent drop in
revenues in March. The company said it expects to run into a cash shortage
within weeks without government help.
Across the quarter, revenues fell by 18 per cent to €6.4
billion, with adjusted earnings before taxes amounting to a loss of €1.2
billion compared to a loss of €336 million in Q1 2019. It expects to take a
further hit from the value of fuel hedges and “crisis-related asset impairments”.
Because the group cannot predict when flights will be able
to resume, it expects to take a “considerably higher” loss in the second
quarter.
Lufthansa Group’s airlines – Lufthansa, Austrian Airlines, Brussels
Airlines, Swiss and Eurowings – are currently only operating a tiny fraction of
their previously scheduled flights, though they have been assisting in the
transport of key medical supplies through cargo-only services and repatriation
flights. Chief executive Carsten Spohr told employees earlier this month that
the company was burning through €1 million an hour in costs.
The group has taken a number of measures to shore up its
finances now and for the future, including permanently decommissioning more
than 40 aircraft and closing its Germanwings subsidiary. It has also agreed reduced working hours with its employee unions.
Lufthansa Group said it currently has liquidity of around
€4.4 billion thanks to financing measures totalling about €900 million since
mid-March. However, due to ongoing contract liabilities and refunds of
cancelled tickets, the company expects this liquidity to run short in the
coming weeks.
In a statement, the company said: “The group does not expect
to be able to cover the resulting capital requirements with further borrowings
on the market. The group is therefore in intensive negotiations with the
governments of its home countries regarding various financing instruments to
sustainably secure the group’s solvency in the near future. The management
board is confident that the talks will lead to a successful conclusion.”