Lufthansa has today warned employees that a previous commitment to try to avoid forced lay-offs was no longer realistic and that 22,000 jobs were now at risk of redundancy. The warning came on the same day that the German flag carrier posted a €1.7 billion loss for the first six months of 2020 and cautioned that demand might not return to pre-COVID levels until 2024 at the earliest.
The airline’s chief executive, Carsten Spohr blamed a shaky recovery in demand for air travel and the looming threat of a second wave of COVID-19 surging across Europe as the main reason for wielding the axe on the Lufthansa workforce. Spohr also pointed the finger of blame at employee unions for failed negotiations on agreements that could have avoided redundancies.
The entire Lufthansa Group – which includes airlines like Austrian, SWISS and its low-cost Eurowings subsidiary – has already shrunk by 8,300 employees to just over 129,000 since the beginning on the pandemic. A further 22,000 full-time jobs could now be lost, as well as a 20 per cent reduction in executive roles.
Despite the crash in demand for air travel, Lufthansa continues to benefit from €2.8 billion in liquidity, not including a €9 billion taxpayer-funded German government bailout. Many of Lufthansa’s employees in Germany remain on short-time working arrangements with salaries topped up by the State.
“We are experiencing a caesura in global air traffic. We do not expect demand to return to pre-crisis levels before 2024. Especially for long-haul routes there will be no quick recovery,” Spohr cautioned.
While pointing to the first signs of recovery on tourist routes, Spohr said the group would “not be spared a far-reaching restructuring of our business”.
“We are convinced that the entire aviation industry must adapt to a new normal. The pandemic offers our industry a unique opportunity to recalibrate: to question the status quo and, instead of striving for “growth at any price”, to create value in a sustainable and responsible way,” he continued.
Lufthansa confirmed plans on Thursday to permanently ground 100 aircraft but said it plans to offer the same amount of capacity as pre-COVID levels by forcing productivity improvements across the business. Capacity will rise to 50 per cent on long-haul routes and 55 per cent on short-haul routes over the new few months.
The airline said it expects a “significant” overall loss for the year.
