(Bloomberg) -- Deutsche Lufthansa AG will embark on a wide-ranging restructuring effort to help repay a 9 billion-euro ($10 billion) bailout from the German government, with job losses and disposals on the agenda to reduce costs and bolster cash flow.
Europe’s biggest airline said in a statement Wednesday it would slash employee expenses and look at spinning off non-core units.
- Lufthansa’s pledge to cut costs is the first step in what could be a protracted fight with powerful labor representatives, which have previously thwarted efforts to trim outgoings with pilot and cabin-crew. With the state taking a 20% stake as part of the rescue, attempts to streamline operations could get even more complicated.
- First-quarter losses more than tripled, even before the worst of the coronavirus crisis hit. Losses will widen in the second quarter after lockdowns effectively grounded the Lufthansa fleet.
- Fuel-hedging losses totaled 950 million euros in the first quarter, adding to the pressure on the balance sheet when ticket revenues are just a fraction of the normal level.
- Sales dropped 18% to 6.44 billion euros in the three months through March, with the pandemic making an impact from mid-February.
- The adjusted EBIT loss was 1.22 billion euros, worsening from a 336 million-euro deficit a year earlier. The airline said it couldn’t issue guidance beyond saying full-year results will be significantly lower.
- To see the statement click here.
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