Lufthansa Group suffered a loss of €2.1 billion in net profit in the first quarter of 2020, it announced on Wednesday.
"The travel restrictions imposed due to the global spread of the coronavirus" are to blame for the Group's loss in earnings, they said in a press release.
"Group revenue in the first quarter fell by 18 per cent to €6.4 billion (previous year: €7.8 billion)," they said, adding that "cost reductions could only partially offset the revenue decline in the quarter."
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"The Group recorded impairment charges of €266 million on decommissioned aircraft and €157 million on the goodwill of LSG North America (minus 100 million) and Eurowings (minus 57 million)," they said, and "the negative market value development of fuel cost hedges had a negative impact of €950 million."
"Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent," said Lufthansa Chairman Carsten Spohr. "In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this."
Lufthansa can count on German state support, which allow the Group to "secure the solvency of the company until it is able to generate sufficient funds from its own resources."
"We have succeeded in reducing fixed costs by one third within a short period of time. Nevertheless, in our operating business we are currently consuming around 800 million euros of our liquidity reserve per month," said Thorsten Dirks, Member of the Executive Board Digital and Finance.
"In addition, the reimbursement of cancelled airline tickets and the repayment of financial liabilities that have fallen due will have a foreseeable negative impact on our liquidity development," he added.
"In order to repay the loans and coupons quickly, we will have to significantly increase our annual free cash flow compared to pre-crisis levels - even though global demand for flights will remain below pre-crisis levels for years to come," Dirks said.
"This will only succeed if we implement restructuring programs in all areas of the Group and agree on innovative solutions with the unions and working councils."
The Brussels Times