Lufthansa posts €952m Q2 loss but expects long haul travel to improve this year

Deutsche Lufthansa posted a €952 million loss, while saying it expects long-haul travel to improve this year with loosening Covid-19 restrictions alongside the global rollout of vaccinations.

North America could open up from late summer, with Asia following from the end of the year, the company said in its second quarter earnings statement. Despite rising expectations, the carrier kept its capacity forecast for 2021 as a whole unchanged at 40 per cent of pre-pandemic levels in 2019.

The operating loss for the second quarter was greater than the €766 million average of analysts’ estimates, though narrower than the €1.7 billion loss a year earlier.

For Europe’s three big airline groups, the recovery is still a mixed bag. While regional travel is rebounding, a significant chunk of their businesses are tied to long-distance routes. British Airways parent IAG SA said last week it will offer only 45 per cent of 2019 capacity this quarter, while Air France-KLM plans to fly up to 70 per cent of its usual seats and return to profit.

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Cash outflow

Lufthansa, which owns Swiss, Austrian Airlines and low-cost carrier Eurowings, said it had a cash outflow of €200 million for the second quarter - a number in line with previous guidance. It kept its main guidance for a smaller loss than last year on hold. The firm also said it had made progress in refinancing its state bailout package through bond placements.

“However, there is no way around making the Lufthansa Group profitable again as quickly as possible and implementing further cost reductions,” said Lufthansa Chief Financial Officer Remco Steenbergen.

Regional Recovery

After a torrid 18 months, European airlines are finally starting to see a path out of the coronavirus crisis as governments start to ease quarantine rules that have battered the industry. Carriers on the continent are now operating at 68 per cent of 2019 capacity, according to Bloomberg’s weekly flight tracker, up from about a third in April.

Lufthansa received a €9 billion state bailout last year to help it get through the pandemic, and Europe’s largest airline has been considering ways to pay back the government before the country’s federal election on September 26th.

- Bloomberg