Lufthansa Group Announces First Restructuring Package

After a few rough months in the travel industry, airlines are putting plans forward for the future. Lufthansa Group recently announced its first restructuring package after a significant decline in air travel due to the coronavirus.

Among many other strategic moves, the airline’s flight suspension led to the first permanent capacity reduction and downsizing of operations, which will be socially responsibly implemented.

According to the Executive Board of Deutsche Lufthansa AG’s assessment, it may be months before global travel restrictions are fully lifted and possibly years before worldwide air travel demand rises back to pre-crisis levels. Based on the evaluation, the Executive Board decided to extensively reduce flight operations and administration long term.

Lufthansa

will permanently decommission six Airbus A380s (already scheduled for sale to Airbus in 2022), seven A340-600s and five Boeing 747-400s. Additionally, 11 Airbus A320s will be pulled from short-haul flights. The final decision in phasing out seven A340-600s and five Boeing 747-400s was based on both environmental and economic impacts.

Lufthansa Cityline also plans to remove three Airbus A340-300 aircraft from service — the regional carrier has operated long-haul flights for Lufthansa since 2015. Also under Lufthansa’s financial umbrella, Eurowings will reduce its number of aircraft — an additional 10 Airbus A320s in the short-haul sector will be phased out, along with a reduction to Eurowings’ long-haul business.

The concept of bundling Eurowings’ operations into one unit was determined before the crisis, and is now accelerated. Germanwings flight operations will discontinue and all options as a result will be discussed.

The Lufthansa Group airlines terminated nearly all wet lease agreements with other airlines.

Also due to the crises, pre-determined restructuring programs for Austrian Airlines and Brussels Airlines will be intensified — both companies are reducing fleets. Swiss International Air Lines is also adjusting fleet size, delaying deliveries and considering early phase-outs of older aircraft.

In an effort to ease negative impacts on employees, the Lufthansa Group is restructuring in order to offer continued employment within the Lufthansa Group, wherever possible. This involves discussions with unions and workers councils.