Lufthansa chair says aviation’s future may hinge on state aid 

Lufthansa has grounding 700 of its 763 fleet due to the coronavirus and its chairman said that if the situation continues much longer the future of aviation “cannot be guaranteed without state aid”.

Carsten Spohr, chairman of the executive board of Lufthansa said that, “the  spread of the coronavirus has placed the entire global economy and our company as well in an unprecedented state of emergency. At present, no one can foresee the consequences.”

Due to a combination of falling passenger demand and the imposition of travel bans by a number of country’s Lufthansa has taken an axe to its flight schedule – subsidiary Air Dolomiti conducted its last flight for the time being yesterday on March 18. While all Austrian airlines flights are suspended until 28 March. Brussels Airlines will not be offering any regular flights in the period from 21 March to 19 April.

Lufthansa itself is discontinuing its long-haul operations in Munich and will initially only offer long-haul flights from Frankfurt. SWISS will offer only three weekly long-haul flights a week to Newark (USA) in addition to a substantially reduced short- and medium-haul schedule. Lufthansa’s short-haul program will also be substantially reduced further, and only Lufthansa CityLine services will be operated from Munich.

While Spohr warned of the potential need for state aid should flight numbers continue to be impacted he pointed to the firm’s strong financial position saying Lufthansa Group has raised additional funds of around 600 million euros in recent weeks and has liquidity of around 4.3 billion euros. Additionally it has unused credit lines of around 800 million euros.

Spohr said that aircraft financing was being considered in order to raise further liquidity – Lufthansa own 86% of its planes, which have a book value of 10 billion euros.

"The Lufthansa Group is financially well equipped to cope with an extraordinary crisis situation such as the current one,” said Spohr.