Germany's largest airline Deutsche Lufthansa AG is planning to further reduce its fleet as part of a third restructuring as a result of a continued downturn in travel demand. The latest plan might see the retirement of the airline's A380 fleet.
Lufthansa said this week its outlook for the international travel industry remained grim. The company said its business had significantly worsened over the past weeks - dropping from a slight recovery in bookings in July and August. Now that the summer travel season is coming to an end Lufthansa expects business to continue to worsen throughout the end of the year.
Previously, Lufthansa forecast passenger numbers would recover to about 50% of prepandemic levels by the fourth quarter. However, the company now says that prediction seems unrealistic. In its latest forecast, Lufthansa expected passenger numbers may be about 20% only of prepandemic levels during the fourth quarter.
During the height of the pandemic, Lufthansa said it was reducing its fleet size by about 100 aircraft. Now, the company has increased that number to about 150 aircraft. Lufthansa said it planned to place up to eight of its A380s in long-term storage. The airline might return them to service within "a couple of years" if there was a "rapid market recovery."
Given the continued downturn in travel demand, industry experts say Lufthansa might end up retiring its entire A380 fleet. In May, Air France was the first Europe airline to retire its entire A380 fleet. Lufthansa might be the second.
Its planned fleet reduction is expected to result in an impairment charge of about 1.1 billion euros. Lufthansa said it was currently burning through around 500 million euros a month with its current operations. Through the fleet reduction and job cuts, the airline hopes to reduce that to about 400 million euros during the fourth quarter.
As it reduces the size of its fleet Lufthansa is expected to impose more layoffs. The airline has said it currently has around 22,000 surplus positions. It is reportedly still in talks with workers' unions to minimize job cuts.
