Lufthansa Seeks German Wage Support to Weather Crisis

(Bloomberg) --

Deutsche Lufthansa AG has applied for German subsidies to offset wages of some 31,000 workers that have been idled because the airline has largely grounded its fleet.

The so-called Kurzarbeit program affects cabin crew and ground staff, a spokesman confirmed to Bloomberg News by email. The company is in talks with its pilots union about similar measures, with a solution “on its way”, the spokesman said.

The program is meant to offset wages lost when companies are forced to temporarily halt activities. It’s one way Germany is helping companies including Lufthansa, the country’s biggest airline, to get through the coronavirus crisis.

Airlines worldwide face $252 billion in lost revenue this year because of the pandemic, the International Air Transport Association said Monday. Germany could take a stake in Lufthansa in addition to providing a loan, officials have said. The airline said earlier this month it has liquidity of about 4.3 billion euros and unused credit lines of 800 million euros.

If the government accepts Lufthansa’s application, the state would pay part of the reduced salary for employees, helping the airline conserve cash amid the near-stop in revenues. Avoiding mass layoffs helped German manufacturers ramp up production after the financial crisis a decade ago.

©2020 Bloomberg L.P.

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