Lufthansa Group Reduces Operating Loss Through Cost Savings

by Satu Dahl
Photo Credit Oliver Roesler

Lufthansa Group’s business performance  has continued to be significantly affected by global travel restrictions in the first quarter of 2021. However, the group has managed to create significant cost savings which have helped it to achieve better financial results compared to the previous year.

Lufthansa Group’s operating loss, based on adjusted EBIT, was EUR 1.1 billion, lower than in the previous year’s minus EUR 1.2 billion. The company also announced that its sales fell by 60% to EUR 2.6 billion in the first quarter of the 2021 financial year, compared to the previous year’s EUR 6.4 billion which was only partially affected by the effects of the pandemic.

Photographer Anna Sophie Bruening

Image supplied by Lufthansa. Photographer Anna Sophie Bruening.

Operating expenses decreased by 51% to EUR 4.0 billion and the number of employees fell by 19%. Lufthansa Group has a voluntary leave programme for its ground employees which it says aims to help reduce the number of employees further in a socially acceptable way.

CEO of Deutsche Lufthansa AG, Carsten Spohr commented: “The longer the crisis lasts, the greater people’s desire to travel again becomes. We know that bookings shoot up wherever restrictions are loosened and travel becomes possible again. Given the foreseeable major advances in vaccination rates, we expect demand to rise sharply from the summer onwards. Encouraging signals, such as the announcement by the EU Commission that it will once again allow vaccinated passengers from the USA to travel to Europe, confirm our confidence.”

“By contrast, the first quarter was still completely dominated by the pandemic. Thanks to consistent cost savings, we were nevertheless able to achieve better results than in the previous year. The changes already implemented in the Group are showing effect. We will not ease in our efforts to further modernize the Lufthansa Group, to make it leaner, more efficient, and to maintain our position among the world’s leading airlines.”

Industry outlook

Lufthansa Group expects demand to gradually recover in the second quarter of the year and significant market recovery in the second half of the year. For the full year, it predicts a capacity of approximately 40 percent of the pre-crisis levels due to vaccination programmes and the further availability and growing acceptance of testing possibilities.

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