German Airline Lufthansa Reports a Record 2020 Loss as Revenue Tumbles 63%

By Adriana Anastasiades Thursday, March 4, 2021

Lufthansa Boeing 747-400.

The Deutsche Lufthansa AG, the second-largest airline in Europe by the number of passengers carried, has reported a recorded loss for 2020 amid a pandemic-driven plunge in demand for international travel.

The Airline Weighs Faster Plane Retirements

Lufthansa sustained a record €6.7 billion ($8.1 billion) loss for 2020, while business revenue plunged 63% to €13.59 billion ($16.37 billion). For Q4 to end-December, the air business suffered a net loss of €1.14 billion ($1.37 billion), which is better compared to the analyst consensus for a loss of €1.24 billion ($1.49 billion).

Adjusted earnings before interest and taxes (EBIT) came in at negative €1.29 billion ($1.55 billion), also topping the analysts’ consensus. Business revenue for Q4 tumbled 71% to €2.59 billion ($3.12 billion).

“The past year was the most challenging in the history of our company - for our customers, our employees and our shareholders. Travel restrictions and quarantine have led to a unique slump in demand for air travel. Now internationally recognized, digital vaccination and test certificates must replace travel bans and quarantine so people can once again visit family and friends, meet business partners or learn about other countries and cultures,” said Carsten Spohr, CEO of the company, in today’s statement.

Going forward, the German company expects to fly in 2021 at 40% to 50% of 2019 levels, which marks a downgrade from the previous forecast of 40% to 60%. If needed, the air business can restore 70% of its flight schedule “in the short term.”

The airline company is preparing its finances for an average monthly operating cash loss of about €300 million ($361.2 million) in Q1 of 2021. Lufthansa is also expecting to post a narrower 2021 EBIT (earnings before interest and taxes) loss, compared to last year’s €5.45 billion loss ($6.56 billion).

“We have sufficient liquidity to withstand a market environment that remains difficult,” CFO Remco Steenbergen said.

The air business is preparing to witness a surge in demand for travel from summer onwards. Given these expected losses, the company’s CEO has placed an even greater focus on sustainability.

Lufthansa is currently weighing whether to leave aircraft older than 25 years on the ground permanently. Instead, the company may adjust to become a “smaller, more agile” fleet.

The company stock tumbled 2.7% in today’s Frankfurt trading session on the downgraded 2021 flight capacity outlook.

Summary

German airline business Lufthansa posted a better-than-expected loss for Q4 and 2020 but downgraded the 2021 flight capacity outlook to send its shares lower in Frankfurt today.

About the Author


Headshot of Adriana Anastasiades

Adriana is a journalist with a passion for reporting on business leadership and a diverse interest in multiple industries.

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