Pandemic-hit Lufthansa to cut 22,000 jobs

Layoffs at Germany’s largest airline come despite €9bn government bailout approved last week

The tails of aircraft of the German airline Lufthansa are seen at the "Franz-Josef-Strauss" airport in Munich, southern Germany, on June 11, 2020.  German airline Lufthansa said on June 11, 2020 that it would have to slash 22,000 full-time jobs as the recovery in demand for travel following the coronavirus pandemic will be muted. / AFP / Christof STACHE

German airline Lufthansa said on Thursday that it would have to slash 22,000 full-time jobs as it predicts a sluggish rebound 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 planes 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 per cent of the Lufthansa Group's total workforce of 135,000.

The airline said however that it would look at how it could use plans 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.

(FILES) This file photo taken on April 28, 2020 shows a technician of the German airline Lufthansa working at a parked plane at the "Franz-Josef-Strauss" airport in Munich, southern Germany.  German airline Lufthansa is to cut 22,000 jobs due to the effects of the coronavirus pandemic, a spokesman said on June 11, 2020. / AFP / Christof STACHE

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 bailout deal from the German government worth €9 billion (Dh37.6bn).

The bailout will see the government take a 20-per cent stake in the group, with an option on a further five per cent 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 to 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 four billion and without any consultation on the matter," he tweeted. "If Lufthansa should cut 22,000 jobs, the German government is responsible!"

Lufthansa said last week it will undergo "far-reaching" restructuring as it posted a first-quarter net loss of €2.1bn.

On top of the collapse in passenger numbers, depreciation of some company assets sapped the bottom line.

A closed check-in desk of German airline Lufthansa is seen at Berlin’s Tegel airport on June 11, 2020. German airline Lufthansa said on June 11, 2020 that it would have to slash 22,000 full-time jobs as the recovery in demand for travel following the coronavirus pandemic will be muted. / AFP / Tobias SCHWARZ

Chief executive Carsten Spohr warned in May that the airline may have 100 planes too many as it came out of the crisis, but at that time he predicted an overhang of only 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 per cent of passenger connections at Lufthansa fell away, leaving an "emergency" timetable comparable to that of the 1950s.

Daily passengers dwindled to 3,000 from the usual 350,000.

_______________

EDITOR'S PICKS
NEWSLETTERS