Thursday, 9 April 2020

Major restructuring and downsizing for the Lufthansa Group an omen of things to come for the European aviation industry

Six A380s are being axed from the Lufthansa fleet.                                                                              Photo Airbus
With the coronavirus COVID-19 crisis, showing no real signs of slowing in Europe, one of the unions biggest airline groups has released details of a drastic initial downsizing.

The Executive Board of Deutsche Lufthansa AG does not expect the aviation industry to return to pre-coronavirus (PC) crisis levels very quickly and with that in mind, it has decided to instigate an initial round of downsizing.

This major downsizing will affect almost all flight operations of the Lufthansa Group and is perhaps an omen of what is to come from carriers around the world.

The tragic news for fans of the double-decker A380 is that the airline will withdraw six of them immediately and they will be decommissioned and offered for sale.  They were,  prior to coronavirus (PC) scheduled to be removed from service and up for sale to Airbus in 2022 anyway.

Lufthansa will also be permanently decommissioning seven Airbus A340-600s, five Boeing 747-400s and eleven Airbus A320s will be withdrawn from short-haul operations. These aircraft withdrawals will greatly reduce capacity at its hubs in Frankfurt and Munich.

Lufthansa Cityline, which has been operating long-haul tourist services will see three Airbus A340-300 aircraft be axed. 

Eurowings is having at least ten Airbus A320s phased out,  while its long-haul business will also be reduced.  

Germanwings flight operations will be discontinued.

The restructuring programs already initiated at Austrian Airlines and Brussels Airlines will be further intensified and both companies are working on reducing their fleets by a third.

SWISS International Air Lines is phasing out older aircraft and delaying the delivery of new ones.  

The Lufthansa Group airlines have already terminated almost all wet-lease agreements with other airlines, any remaining ones will be terminated as soon as possible

The is no detail yet on exactly how many jobs will be lost as a result of this first round of restructuring, conservative estimates have been around the 6000 level from various industry commentators.  Lufthansa says it wants to offer as many people as possible continued employment within the Lufthansa Group and advised talks with unions and workers councils would be arranged. However, it warned that new employment models in order to keep as many jobs as possible would be needed.

It is Lufthansa's board view that it will take months until the global travel restrictions are completely lifted and then it would be years until the worldwide demand for air travel returns to PC levels.  

Going back to Airbus?                                                                                 Photo Lufthansa

Seven A340s to be axed                                                                              Photo Lufthansa

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