The boss of Lufthansa Group has issued a plea to passengers to be patient over cash refunds for cancelled flights amid the Covid-19 crisis.
Chairman and chief executive Carsten Spohr warned that the entire travel industry was at risk due to demands for refunds.
With losses of €1 million a hour, almost all flights grounded and an appeal to governments for state aid, he said: “We are fighting for the future of this company and the future of the roughly 138,000 employees of the Lufthansa Group.
“We are doing everything in our power to keep as many of them on board as possible.”
He told shareholders the German airline group’s annual meeting in Frankfurt: “We are also asking a lot of our customers, above all, patience.
“Most European countries are supporting the temporary voucher solution for cancelled tickets. The EU has, however, not yet been able to agree on such a regulation.
“It could endanger the entire travel industry if we are required to continue instant reimbursement of cash in the current phase.
“In addition, our customer centres and processes are simply not designed for such a multitude of reimbursements. We therefore also ask our customers for their understanding.”
He described Lufthansa as facing the most severe global economic slump since 1930 with global air transport suffering its worst crisis ever.
Sophr revealed that three years of modernisation and record results are being threatened by a single event with losses of €1 million an hour.
Travel restrictions to prevent the spread of Covid-19 have seen daily passenger carryings deteriorate to 3,000 a day from 350,000 before the crisis with only 60 of the group’s 760-strong fleet operating.
More than 3,000 flights a day have had to be cancelled with a 99% collapse in passenger numbers.
“In less than 65 days, we have returned to the flight plan levels of 65 years ago. That is extremely bitter, devastating and painful,” Spohr admitted.
“The question is whether we can avoid bankruptcies with the support of the governments of our four home countries.
“It is about how quickly we will be able to recover from the crisis so that we can start to grow again independently as soon as possible.
“In a nutshell it is about the future of the Lufthansa Group,” he said, revealing that 100 aircraft will have to be cut from the fleet, putting 10,000 jobs at risk.
Spohr outlined three phases for crisis management in a rescue operation:
- The ‘Grounding Phase’ in which almost the entire fleet has to remain on the ground.
- The ‘Restart Phase in which operations slowly start ramping up.
- The ‘New Normal Phase’: a working title for the time after the crisis.
Spohr added: “We have practically no earnings. However, the costs for staff, material, rent or fuel hedging continue. After three record years, we are currently losing about €1 million of our liquidity reserves per hour in operations alone.”
More than 80,000 staff are on reduced working hours although plans are in place for an expansion of the flying schedule from June although it will take until 2023 for global demand to return, albeit at a lower level than before the virus.
“We currently expect that the global demand for air travel will no longer grow as dynamically in the long term as it did in the past years,” Spohr predicted.
“People’s travel behaviour will change, both in terms of leisure and business travel. As a result, global air transport will have to restructure itself.
“We expect a global transformation of air transport and we would like to continue playing a leading role with the Lufthansa Group in the future.”