Yahoo Finance Lufthansa to slash jobs in wake of €2.1bn loss
Lufthansa has pledged to launch sweeping job cuts as it seeks to repay a €9bn (£8bn) bailout from German taxpayers and battles against widening losses.
Europe's second-largest airline vowed to slash staff and sell assets to reduce costs and bolster its reserves in the wake of the coronavirus pandemic.
The German carrier sank to a €2.1bn loss in the first quarter of the year and said it has been burning through €800m a month.
The results come days after its board approved a rescue package from Berlin that will hand the German government a 20pc stake in Lufthansa while it relinquishes some prized landing slots to rivals.
Global air travel has been crushed by the crisis, pushing a host of carriers to the brink of disaster. It is expected to take years before passenger numbers return to the levels reached in 2019.
Carsten Spohr, Lufthansa's chief executive, said: "In view of the very slow recovery in demand, we must now take far-reaching restructuring measures."
The company's subsidiary Brussels Airline will reduce its workforce by a quarter and its fleet by 30pc, while Austrian Airlines' staff and fleet will be cut by a fifth.
The number of job losses for the Lufthansa operations have not been revealed.
Bosses mothballed 700 of the business's 760 aircraft due to the pandemic and said they expect to fly just 40pc of its regular schedule by September.
The first quarter loss was driven by a €950m charge on fuel price hedges after the business was wrongfooted by a collapse of the oil price, as well as writing off €265m from the value of its fleet. Other airlines including British Airways have been similarly stung by hedging.
Daniel Roeska, an analyst at Bernstein, said: "The scale of the restructuring is immense, and agreement with unions on drastic reductions in staff numbers, wages or both will be difficult to achieve.
"The company must demonstrate greater skill in these negotiations than ever before."
Separately, Budapest-based budget airline Wizz Air reported a 30pc jump in profits for the year to the end of March, but said it could not provide guidance for this year to due to the pandemic.
Shares in Lufthansa jumped 5.4pc in Frankfurt, while Wizz shares climbed 6pc in London.
