Declaring that aviation cannot carry on without state aid indefinitely, but the group would do its best to use its own credit lines and options for the time being, Carsten Spohr painted a grim picture.
The V shape decline and recovery for airlines is simply seen as a myth. The impact on business and the public, and its ability to bounce back, will take months, even years and he said “After the crisis the Lufthansa group will not return to the previous normal circumstances and fly on as usual…We must rethink the entire business.”
Even if individual countries bring infection rates under control, fears of further outbreaks will see continued restrictions on flights from other parts of the world, and without a globally coordinated and ruthless Wuhan-style imposition of mass quarantine, which isn’t really viable in democratic states, it’s difficult to comprehend how COVID-19 will dissipate as a significant threat to healthcare systems until a vaccine is available. That’s 18 months – way longer than governments can support airlines or anything else for that matter.
Lufthansa is planning a massive reduction in its capital expenditure – planning cuts of $3.4 billion. That’s going to include 777-9, A350, and A320neo as well as 777F.
Serious fleet-wide cutbacks are also expected, though nobody can yet comprehend quite what they will be. Obvious cut backs are 744’s, A380’s and 748i’s never mind the A346 and A343’s left in service, as well as the older A330’s. If cargo plunges back to its normalised levels, then the MD-11F will be gone in very short order.
The general feeling is that aviation in Europe is going to be creaking on its knees, and only those who have protected their cash balances – Wizz, easyJet, RyanAir, IAG, will stand the best chances. Even they will be forced into a chronic medium-term change of behaviour and re-evaluation of what really matters and those airlines with hefty debt levels – Lufthansa Group is actually the worst, will be the ones to pay the highest price.