Lufthansa Group will dramatically cut the number of four-engine aircraft and phase out eight widebody aircraft types over the next few years as part of its strategy to become a smaller, cost-efficient, and more environmentally sustainable airline. It also has begun analyzing whether all aircraft older than 25 years will remain on the ground permanently. Speaking during the company’s 2020 financial results presentation on Thursday, Lufthansa Group CEO Carsten Spohr insisted Lufthansa is “passionate” about reducing the climate impact of flying. “Sustainability is of the highest priority despite the crisis,” he said.
The share of four-engine aircraft in the group’s long-haul fleet will fall to below 15 percent and be replaced with latest-generation long-haul models, said Spohr. “From today’s perspective there is no place for the [Airbus] A380 in our future fleet,” he concluded. In addition to the A380s, of which it carries 14 on its books, all its 747-400s, 777-200s, A340-600s, A340-300s, A330-200s, B767-300s, and MD-11Fs will go. The streamlining and modernizing of the long-haul fleet should result in a 10 percent reduction of long-haul unit cost and a reduction of CO2 emissions per ASK by 15 percent by the mid-2020s, the airline estimates. At year-end 2020, Lufthansa Group’s order book consisted of 177 aircraft—with options for another 102—including firm orders for 26 A350-900s, 20 Boeing 787s, and 20 777-9s. Scheduled for delivery between 2022 and 2025, the 787s will mostly go to Lufthansa German Airlines, though Spohr noted that the group has not yet decided the final distribution of the aircraft over the different airline subsidiaries.
The Lufthansa Group expects to take delivery of up to 12 aircraft: 11 A320neo family and one A220, this year.
The group, which includes network airlines Lufthansa, Swiss, Austrian Airlines, and Brussels Airlines, as well as low-cost subsidiary Eurowings, tempered its capacity guidance for 2021 and mid-term recovery. It now expects to operate 90 percent of its pre-crisis capacity in 2024, down from a previous prediction of 100 percent in 2024, and between 40 percent and 50 percent of its 2019 capacity levels this year, compared with a previous target of 40 percent to 60 percent. The group will have an average of 350 aircraft parked in 2021 and it plans to keep 250 on the ground next year and around 150 in 2023.
The lower 2021 capacity outlook resulted mainly from a weak first quarter when travel restrictions, including for intra-European flying, remained in place or even expanded. Still, Spohr expressed optimism for the summer and said he expects demand to pick up again “as soon as restrictive travel limits are reduced by a further roll-out of tests and vaccines.” The group’s airlines could quickly raise capacity to 70 percent of pre-crisis levels if demand increases. CFO Remco Steenbergen declined to provide a revenue outlook because there remain “just too many uncertainties.”
The European Commission should make the conditions for a restart a priority, Brussels Airlines’ new CEO, Peter Gerber, told AIN. Gerber stressed facilitating the restart should be done “as soon as possible” but it is also “paramount that it is done on a level playing field” with non-EU carriers. He voiced the same concerns that the EU's Green Deal could distort the competitive balance. “We are striving for a more sustainable aviation industry but also here we have to make sure it does not distort competition” he noted, pointing to the mandatory uptake of a percentage of SAF as a point of concern.
All of Lufthansa Group’s airlines and divisions, except for cargo, reported losses last year. Group net loss finished at €6.7 billion on a 63 percent fall in revenues, to €13.6 billion, and a 67 percent decline of the number of flights, to just 390,000. Passenger numbers fell 76 percent for the year.
As part of its what it calls its “redimensioning,” the group is examining the disposal of subsidiaries that offer only minor benefits to the core airline business. That could include a partial sale or listing of its successful MRO arm, Lufthansa Technik, according to Spohr. The Lufthansa boss dismissed reports in the Italian press that the company could participate in a relaunch of Alitalia, stressing Lufthansa “absolutely” harbors an interest in commercial cooperation, but not in acquiring a financial stake.