German airline Lufthansa said Thursday (11 June) that it would have to slash 22,000 full-time jobs as it predicts a muted recovery in demand for travel following the coronavirus pandemic.
“The recovery in demand in the air transport sector will be slow in the foreseeable future,” the airline said. About 100 aircraft will remain grounded after the crisis, leading to “a total of 22,000 fewer full-time positions in the Lufthansa Group, half of them in Germany”.
The posts make up 16% of the Lufthansa Group’s total workforce of 135,000. The airline said however that it would look at how it could use schemes for shorter work hours and other crisis arrangements to avoid outright redundancies.
“Without a significant reduction in personnel costs during the crisis, we will miss the opportunity of a better restart from the crisis and risk the Lufthansa group emerging from the crisis significantly weakened,” said Michael Niggemann, who heads the airline’s human resources and legal affairs departments.
Like its peers, the Lufthansa group – which also includes Swiss, Brussels and Austrian Airlines – has been brought to its knees by the restrictions introduced to curb the spread of the coronavirus.
Around 700 of the group’s 763 aircraft were grounded at the peak of the lockdowns and it was forced to put 87,000 workers on government-backed shorter hours schemes.
Lufthansa’s supervisory board last week approved a €9 billion bailout deal from the German government. The bailout will see the government take a 20% stake in the group, with an option on a further 5% plus one share to block hostile takeovers.
That would make the federal government Lufthansa’s biggest shareholder. The group is to ask its shareholders to back the accord at an online meeting on June 25, and it also needs be signed off by European competition authorities.
Bernd Riexinger of the opposition far-left Die Linke party on Thursday slammed the state aid plan.
“Nine billion (euros) for a company worth 4 billion and without any consultation on the matter,” he tweeted. “If Lufthansa should cut 22,000 jobs, the German government is responsible!”
Lufthansa last week said it will undergo “far-reaching” restructuring as it posted a first-quarter net loss of €2.1 billion.
On top of the collapse in passenger numbers, depreciation of some company assets sapped the bottom line.
CEO Carsten Spohr warned in May that the airline may have 100 planes too many as it moved to emerge from the crisis, but at that time he predicted an overhang of just 10,000 jobs.
With the peak of the crisis over for now in Europe, the airline is plotting its restart, but uncertainties hang over many of its flight routes as the eye of the pandemic storm shifts elsewhere.
At the height of the crisis, about 90% of passenger connections at Lufthansa fell away, leaving an “emergency” timetable comparable to the 1950s. Daily passengers dwindled to 3,000 from the usual 350,000.
The airline has also lost its place on Frankfurt’s Dax 30 index after its share price collapsed.