Germany carriers Lufthansa slumped to €1.2 billion Q1 loss, with the vast majority of the deficit coming from a €950 million fuel hedging payout.
The combination of the global collapse in passenger numbers and the dramatic fall in the price of oil in April left the German carrier seriously out of the money on its fuel hedging programme.
Sixty million euros of the loss related to hedges that expired in the first quarter and had a corresponding cash relevant negative impact on earnings. The remainder reflects the valuation of hedges expiring in the future as of March 31.
Lufthansa’s results were originally due for April 30 but were postponed due to the pandemic. While global travel restrictions imposed during Q1 saw Lufthansa's earnings fall by 18 % to €6.4 billion versus €7.8 billion, and cost reductions could only partially make the difference.
"Global air traffic has come to a virtual standstill in recent months. This has impacted our quarterly results to an unprecedented extent. In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this," said Carsten Spohr, chairman of Lufthansa’s executive board.