Europe’s biggest airline is falling back on its most economically sustainable routes as the coronavirus crisis roils global travel markets. Retiring thirsty four-engine aircraft will remove high-capacity models that are hardest to fill and will help Lufthansa boost margins by slashing fuel burn.
A spate of similar moves
“The paradigm now, as illustrated also by Air France KLM or IAG, seems to be to immediately get rid of aircraft that you don’t want,” Stephen Furlong, an analyst at Davy, said. “In any further downsizing, Lufthansa also has to re-engineer its business model away from corporate travel, connecting travel and large aircraft.”
Holding out a hand
Lufthansa may keep a handful of younger A340-600s, preserving capacity for busier routes, the people said. That would also reduce the size of immediate writedowns, which will factor into its decision making, one person said.
That’s without factoring in the narrow-body aircraft that feed passengers onto intercontinental flights and which would be required in lower numbers. Lufthansa may shift more smaller jets to a new touristic arm to limit the damage.
Board member Harry Hohmeister said two weeks ago that demand hadn’t recovered as hoped and that job cuts on a large scale would be “unavoidable”, though the company has denied reports that it might scrap as many as 40,000 positions.
The group has so far said that while it aims to mothball about 300 planes next year and 200 in 2022, the 760-strong fleet will need to be about 100 aircraft smaller from 2023. Handelsblatt reported this week that the number cut could increase, without saying which models might be affected.
The new moves would leave Lufthansa with a four-engine fleet limited mainly to Boeing 747-8I jumbos, the youngest of which are just five years old. The model flopped for Boeing, with Air China and Korean Air the only other airlines operating the passenger version.
No more need
British Airways, the world’s biggest operator of 747 passenger planes, has said that it will retire the fleet as a result of the crisis. BA’s sister company Iberia also plans to stand down an A340 fleet that’s the largest after Lufthansa’s.
Airbus already ended production of its A340 a few years ago because the model sold poorly and the routes that the aircraft previously served were absorbed by large two-engine models. The A380 double-decker will also be phased out once Airbus delivers the final few units to Emirates, by far the biggest operator. And Boeing has announced the end to the 747 programme, closing the era of jumbo jets.