Lufthansa Group yesterday shared details on Lufthansa’s 3rd package within their restructuring programme. They’ve taken decisions after they’ve witnessed a worsening outlook for international air traffic in recent weeks despite minor improvements that were seen in previous months as a result of the impacts caused by the COVID-19 Pandemic. Due to the current outlook, the Board have decided to go ahead with the third package of the Group-wide “ReNew” restructuring programme.
The Group have stated that their medium-term fleet planning would be changed, and they currently expect by the middle of the decade to have a permanent group-wide capacity reduction of 150 aircraft from their fleet.
Lufthansa Group Fleet Composition (at the end of June 2020)
Lufthansa have made further changes to their fleet planning as they plan to now remove the remaining 8 A380s and 10 A340-600s and place them into long term storage, they would only be reactivated if there is an unexpected rapid market recovery. Further, they’ve made a decision to permanently decommission the remaining 7 A340-600s.
Lufthansa Group expects the new fleet changes to result in an impairment of up to €1.1 billion which is likely to be recorded in 3Q of the current year.
The measures that were taken in the 3rd package of the restructuring programme will likely result in an increase in surplus personnel given the operating levels. The article also states that 20% of management positions will be reduced by Q1 2021 while administrative office space will be reduced by 30% in Germany and be reviewed worldwide.
The Group have taken measures to reduce the impacts of the dim outlook through strict cost management as they have planned to reduce the outflow of liquidity from the current €500 million per month to around €400 million per month during winter 2020/21 with a target of positive operating cash flow sometime during 2021.
Connect with us on Facebook – here