Lufthansa Group, which owns the German flag carrier as well as Austrian Airlines, Swiss and Eurowings, intends to cut costs and slim its fleet by retiring all its Airbus A380s, A340s, Boeing 747s and majority of its ageing aircraft.
In fact, the group confirmed that it is seriously considering a policy that would see all aircraft aged over 25 years “remain on the ground permanently”, according to chief executive Carsten Spohr.
Spohr also confirmed the expected retirement of all eight remaining Lufthansa Airbus A380 four-engine superjumbo aircraft, that are notoriously expensive to run and maintain due to their size, particularly during a prolonged period of decimated demand for long-haul travel.
The airline group also intends to cut its fleet by 113 aircraft down to 650 planes by the end of 2023, and phase out its ageing Boeing 747 and Airbus A340 fleets.
Many of these aircraft are currently grounded due to the pandemic, and are expected never to return to service before their upcoming retirement.
It comes as Lufthansa reported an US$8.1 billion loss in 2020, and a US$1.38 billion net loss in the fourth quarter alone. Cash burn has remained stable at around 300 million per month.
However, Spohr remains confident in the European rollout of the vaccine resulting in the easing of travel restrictions in time for the summer season, and the airline is ready to restore 70 per cent of its pre-COVID schedule “in the short term”.
The airline previously put its network capacity ramp-up plans on hold earlier this year as new, stronger strains of the coronavirus tore through Europe.
Lufthansa is anticipating to operate at between 40 and 50 per cent of its pre-COVID capacity throughout 2021, lowering its earlier forecast of 40 to 60 per cent slightly.
The group together cut down its global workforce by 20 per cent to 110,000 employees in 2020, however it still intends to cull another 10,000 German jobs.
“We have sufficient liquidity to withstand a market environment that remains difficult,” chief financial officer Remco Steenbergen said.
In September 2020, the German flag carrier announced it would be moving its eight remaining A380 aircraft into long-term storage, as well as 10 of its A340s.
In a statement at the time, the airline specified that these aircraft would be both transferred to long-term storage facilities and removed from future planning, and would only be brought back into service “in the event of an unexpectedly rapid market recovery”.
Meanwhile, the airline has also inferred another round of staff cuts would be imminent, and suggested previous estimates that the airline is overstaffed by 22,000 may now be too conservative an estimate.
Lufthansa had previously hoped to limit compulsory layoffs by introducing reduced hours and pay across the board, however said it will be in discussions with unions about the necessity of layoffs.
It appears the airline remains in stand-off with unions.
Meanwhile, the airline also stated that it would cut management positions by 20 per cent and German administrative roles by 30 per cent, to reduce costs.