Lufthansa seeks state aid to secure ‘solvency’

Agence France-Presse
Lufthansa seeks state aid to secure ‘solvency’
State bailouts will be indispensable to weather the coronavirus crisis, says the Lufthansa group

FRANKFURT AM MAIN, Germany – German airline giant Lufthansa said on Thursday, April 23, the group was in “intensive negotiations with the governments of its home countries…to sustainably secure the group’s solvency,” as it reported a 1.2-billion-euro operating loss in the 1st quarter.

“The business outlook, existing multibillion liabilities…and refunds of canceled tickets as well as upcoming repayments of financial liabilities” will make state bailouts indispensable, the group said in a statement.

But bosses are “confident” that talks with national capitals – including in the home countries of subsidiaries Brussels and Austrian Airlines and Swiss – “will lead to a successful conclusion.”

Preliminary results showed Lufthansa’s revenues fell 18% year-on-year in January-March, to 6.4 billion euros ($6.9 billion).

In March alone, sales fell almost 50%, or 1.4 billion euros.

On top of the 1.2-billion-euro plunge in adjusted operating profit before interest and taxes (EBIT), Lufthansa “expects crisis-related asset impairments and the negative development of the value of fuel hedges to have a further significant negative impact” on 1st quarter profits, it added.

The group will publish full financial results in “the 2nd half of May,” postponing the release from April 30.

And with its flight plan slashed to a bare minimum, Lufthansa “expects a considerably higher operating loss in the 2nd quarter compared to the 1st quarter,” eating still further into its 4.4-billion-euro cash buffer.

Last week, Lufthansa said its emergency flight plan would remain in effect until at least May 17, while earlier in April chief executive Carsten Spohr said it would need state aid to survive.

The group was carrying fewer than 3,000 passengers daily compared with a pre-pandemic average of around 350,000 a day, Spohr said.

“We are losing about a million euros in liquidity reserves per hour. Day and night. Week by week,” he added. – Rappler.com

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