Deutsche Lufthansa AG (DE: LHAG) said on Monday that it will undertake further restructuring amid the deteriorating international air travel situation.
“Prospects for international air travel have deteriorated significantly in recent weeks,” the German air carrier said in a statement. It said passenger numbers and bookings fell again after “weak signs of recovery” in the summer.
The company plans to further cut its fleet as well as jobs. Lufthansa will take into account an additional € 1.1bn asset impairment in its third quarter financial results.
Previously, the airline expected to reach half of last year's average level of air transportation in the fourth quarter of this year, but now these expectations are not realistic. More likely to come out by 20-30% of last year's indicators.
Lufthansa intends to permanently abandon 150 aircraft against the previously planned 100 by the middle of the decade. Including seven Airbus A340-600s will be finally decommissioned.
The company also intends to carry out larger-scale staff reductions than previously announced cuts of 22 thousand full-time jobs. The exact number is not given in the Lufthansa report.
The airline noted that in the first quarter of 2021, the number of employees in managerial positions in the group will decrease by 20%, and administrative office space in Germany – by 30%.
That being said, the airline still plans to return to generating positive cash flow in 2021.
Lufthansa shares are down 9.5% during Monday trading. The capitalization of the airline since the beginning of this year has fallen by almost 53% and is now about 5.1 billion euros.