By Caroline Copley
BERLIN (Reuters) – A worsening outlook for air travel prompted Lufthansa <LHAG.DE> to further cut its fleet and workforce on Monday as the coronavirus crisis forced it to take a 1.1 billion euro ($1.3 billion) impairment on the value of its aircraft.
The German airline, which secured a 9 billion euro state bailout in June, said the outlook for international air traffic had deteriorated in recent weeks and booking figures were declining as the summer travel period ended.
Lufthansa said it now expects capacity to be in the range of 20% to 30% in the fourth quarter, down from a previous forecast for 50%, as signs of a European recovery at the start of the summer evaporated due to travel restrictions and quarantines.
As a result, Lufthansa plans to reduce its fleet by 150, 50 more than previously planned, to around 610 aircraft, adding that this meant it would need to cut more jobs than the 22,000 full-time positions it had previously announced.
Shares in Lufthansa were down 9.6% by 1417 GMT, compared with a 4.1% DAX index decline.
Lufthansa, which had hoped to limit compulsory redundancies by cutting working hours and salaries, said it would talk with unions. The Verdi union criticised plans to cut staff, but said it remained open for further talks with Lufthansa.
“Job cuts alone will not save the company,” Verdi spokeswoman Mira Neumaier said.
Lufthansa still aims to reduce its monthly cash burn by around 100 million euros per month to around 400 million in the winter period 2020/2021.
It plans to cut 20% of management positions in the first quarter of next year and will reduce its administrative office space by 30% in Germany.
Lufthansa said expanding coronavirus tests for passengers before departure is essential to reviving global air travel.
($1 = 0.8497 euros)
(Additional reporting by Ilona Wissenbach; Editing by Thomas Escritt, Edward Taylor and Alexander Smith)
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