(Bloomberg) — Deutsche Lufthansa AG has marked the beginning of a company-wide restructuring of the tension of job losses on the disposal of assets to help repay its 9 billion euros ($10 billion) rescue plan of the German government.
In Europe, the biggest airline, will slash staff costs, and look at spinning the base units in an effort to reduce costs and strengthen cash flow in the shaft of the corona virus of the crisis depresses revenue, it said in a statement Wednesday. The group has 2.1 billion euros of net loss in the first quarter.
“In view of the very slow recovery of the demand, now we need to take a deep restructuring measures-to-counteract-this -,” Chief Executive Carsten Spohr said in the press release.
Lufthansa is committed to reduce costs, it is likely to lead to a conflict with Germany’s powerful unions, who, in the years before the pandemic has thwarted efforts to reduce expenditure, with the pilots and the cabin crew strikes and you’re out. The situation can be complicated by the state’s 20% stake in the airline as part of the reef rescue, which will include representatives of the government in its activities.
The company is more precise with cuts to its foreign airline of the units, where labour protection laws are less strict than in Germany. Austrian Airlines will see the costs of staff reduced by 20%, and with Brussels Airlines, suffers a 25% reduction in the workforce and a 30% decline in its fleet.
While Lufthansa has said that its liquidity position was becoming “urgent”, the declaration is a gift, no details on the levels of liquidity. The deal will dilute the holdings of current investors, but they should be back in a June 25 vote rather than by the risk of insolvency.
Airlines across the world are in shock as the Covid-19 pandemic brings dozens of years of journey of growth to a shuddering halt, with the leaders of the industry, suggesting that it may take several years for demand to return to earlier levels, particularly in the long-haul markets affected by premium carriers such as Lufthansa.
At the same time, the German carrier, already considered the most stable and powerful, it is in the process of negotiating the bailout, ” it is the largest for the industry until now. Its location highlighs the impact of the virus, and Germany’s willingness to come to the aid of its leading companies.
Lufthansa posted a first quarter loss of 1.22 billion euros, the enlargement of the 336 million euros a year earlier. The imposition of travel bans, from mid-October led to 18% decline in revenue, with a fuel hedging losses also made to suffer the numbers.
The image will be much worse in the current quarter, during which almost all the carrier 760 aircraft have been grounded.
Spohr, said, ” it is impossible to provide full-year forecasts, beyond saying that the result will be much worse.
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©2020 By The International Monetary Fund, L. P.