Lufthansa sees air travel in the doldrums until at least 2024

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Germany’s Lufthansa said it does not expect air travel demand to return to pre-crisis levels before 2024 as a steep drop in revenue pushed it to its worst-ever quarterly operating loss of 1.7 billion euros ($2.02 billion).

The airline said on Thursday the collapse in demand for air travel due to the COVID-19 pandemic meant it carried 96% fewer passengers between April and June than a year earlier, leading to an 80% drop in second-quarter revenue to 1.9 billion euros.

Despite cost cuts, it posted an adjusted operating loss of 1.7 billion euros compared to 754 million euros a year earlier – the worst quarterly result in the company’s 67-year history.

“We are experiencing a caesura in global air traffic. We do not expect demand to return to pre-crisis levels before 2024,” Chief Executive Carsten Spohr said, adding the company would not be spared a “far-reaching restructuring” of its business.

Lufthansa said last month it would cut 20% of its leadership positions and 1,000 administrative jobs as it seeks to repay a 9 billion euro state bailout and navigate deepening losses in the face of the coronavirus pandemic.

The company, which had 129,400 employees as of the end of June, said forced redundancies can no longer be ruled out in Germany due to the development of the market and the course of negotiations with unions.

Lufthansa said it plans to increase short and medium-haul capacity to around 40% of the prior-year period in the third quarter and to around 20% of capacity on long-haul routes.

In the fourth quarter, it expects short- and medium-haul capacity to rise to 55% and to 50% on long-haul routes. Rival Air France-KLM, which also secured state-backed aid, aims to operate at two thirds of capacity before the end of the year.

The company said it expects to post an adjusted operating loss in the second half of 2020 and a further significant decline in adjusted operating profit for the full-year due to very limited operation of important long-haul routes.

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