Lufthansa Group is in talks with four national governments across Europe to negotiate state-funded rescue packages that would total €10 billion.
Aside from the flagship Lufthansa airline, the group also operates Austrian Airlines, Swiss International Air Lines, Brussels Airlines (Belgium), and Eurowings (Germany).
Like many other airlines around the world, Lufthansa has had to furlough workers and slash almost all of its carrying capacity in response to the COVID-19 outbreak. On 23 April, the company posted a €1.2 billion loss in earnings before interest and taxes (EBIT) for Q1 2020.
Earlier this month, Lufthansa chief executive Carsten Spohr said that the company would seek state aid. Though Lufthansa holds around €4.4 billion in cash reserves, he cited a cash burn rate of €1 million per hour.
“We will not be able to survive this increasingly longer-lasting crisis without state support,” Spohr said in a video address to staff earlier this month. “We are losing about €1 million in liquidity reserves per hour. Day and night. Week by week.”
In a briefing posted 23 April, the airline stated that it “expects crisis-related asset impairments and the negative development of the value of fuel hedges to have a further significant negative impact on group profit in the quarter”.
“At present, it is not possible to foresee when the group airlines will be able to resume flight operations beyond the current repatriation flight schedule,” it added. “The group, therefore, expects a considerably higher operating loss in the second quarter compared to the first quarter.”
Reuters reported 24 April that a rescue package could be pushed through as soon as next week, citing anonymous sources.
However, this will be dependent on negotiations with respective national governments and subject to additional loans from Germany’s government-owned state development bank, the Kreditanstalt für Wiederaufbau (KfW).
