Lufthansa: Transforming from Sprawling Conglomerate to ... ? — July 2021

Despite having one of the healthier balance sheets as it entered the pandemic crisis, Lufthansa, Europe’s largest airline group, was laid low by Covid-19. It could easily have been terminal had it not been for a massive €9bn government support package — which gave the German State 20% of the equity making it the group’s largest shareholder.

Through the crisis Lufthansa took early action. Cash drain, at €1m an hour (c€780m a month) was more than halved (with a run rate in the first quarter of 2021 of €232m a month); capital expenditure was reduced by two thirds; and fixed cash costs reduced by 35% (helped by kurzarbeit aid of around €1bn). The group ended 2020 with revenues down by 63%, operating losses of €5.4bn (before deducting aircraft and other asset impairment writedowns of €1.8bn and charges for fuel overhedging of €0.8bn) and net losses of €6.7bn. There was another €1bn loss in the first quarter of 2021.