Lufthansa to Cut 95% of Flights in Survival Mode
Lufthansa to Cut 95% of Flights in Survival Mode
(Bloomberg) --
Four of the world’s leading airlines laid bare the devastation the coronavirus is inflicting on travel, with three major carriers parking nearly 2,000 planes and Qantas Airways Ltd. temporarily laying off close to 30,000 staff in some of the industry’s deepest cuts to date.
The measures at Deutsche Lufthansa AG, Europe’s biggest carrier, go furthest, with Chief Executive Officer Carsten Spohr saying he’ll idle 700 aircraft and 95% of seats, shrinking the flight schedule to a level last seen in 1955. Delta Air Lines Inc. is grounding half its fleet to wipe out 70% of capacity, while American Airlines Group Inc. will park 450 aircraft as it cuts international and domestic routes. Qantas is ceasing international operations.
“The coronavirus has placed the entire global economy and our company in an unprecedented state of emergency,” Spohr said. “No one can foresee the consequences. We have to counter this extraordinary situation with drastic and sometimes painful measures.”
The cuts highlight the desperation gripping airlines as they shrink operations amid a collapse in demand and moves to close national borders. For many operators that means mothballing the business and taking draconian steps to stop cash draining away while the virus retains its grip. Even then, the sector may need $200 billion in state support to weather the pandemic, according to the International Air Transport Association.
U.S. carriers are seeking $58 billion in government loan guarantees, grants and tax relief.
“The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid,” Spohr said, after new bookings at Lufthansa for the week through March 15 fell almost 70%.
American’s parked aircraft, representing 29% of its fleet, come as it slashes international flying by 75% and domestic by 30%. That means cutting more than 55,000 April flights, with more reductions coming in May, President Robert Isom told workers in a message Thursday. The Fort Worth, Texas-based carrier is offering voluntary unpaid leaves and early retirement to help trim spending.
“This is a crisis unlike any we’ve faced in the past,” Isom said. “While these steps are unparalleled, we expect demand to fall even more before it gets better.”
Delta CEO Ed Bastian told staff Wednesday that revenue this month will drop by almost $2 billion from a year earlier, with April projected to be even worse. About 10,000 Delta workers have applied for voluntary leave.
“Making swift decisions now to reduce the losses and preserve cash will provide us the resources to rebound from the other side of this crisis,” Bastian said in a memo released by the airline.
Qantas furloughed most of its 30,000-strong workforce. The Australian company and low-cost unit Jetstar will suspend overseas services from late March until at least the end of May, it said Thursday, with domestic operations cut 60%.
CEO Alan Joyce said in a note to employees that demand had evaporated. “We have no work for most of our people,” he said. “We have to make difficult decisions to guarantee the future of the national carrier.”
Qantas Furloughs Most Employees and Halts All Overseas Flights
Lufthansa is expected to seek a loan from the government, which could take a stake as part of a rescue package, Bloomberg News reported Friday. Spohr said talks have been held with a state bank but that no bailout is needed right now.
The group’s Italian arm, Air Dolimiti, has already halted flights, while the Austrian brand is set to ground operations and a Belgian division will follow suit in two days. The Swiss unit is parking planes at an airport near Zurich.
©2020 Bloomberg L.P.