The global CORONA pandemic continued to have a considerable impact on the Lufthansa Group’s earnings development in the third quarter of 2020. However, compared to the second quarter, losses were reduced due to substantial cost savings and an expansion of the flight schedule in the summer months of July and August. Adjusted earnings (Adjusted EBIT) amounted to minus €1.3 billion (previous year: plus €1.3 billion). The average monthly operating cash drain, before changes in working capital and investments, was €200 million. In the same period, sales fell to €2.7 billion (previous year: €10.1 billion). Net income was minus €2 billion (previous year: plus €1.2 billion). Operating expenses were cut by 43% in the third quarter compared to the previous year, partly as a result of significantly lower fuel costs, fees and a reduction in other costs that vary based on the extent of flight operations. Using short-time work for a large portion of the personnel in combination with other measures resulted in a reduction of fixed costs by more than a third. In addition, strict liquidity management limited the cash outflows.
“Strict cost savings and the expansion of our flight program enabled us to significantly reduce the operating cash drain in the third quarter, compared to the previous quarter. Lufthansa Cargo also contributed to this with a strong performance and a positive result of €169 million. We are determined to keep following this path. We want to return to a positive operating cash flow in the course of the coming year. In order to achieve this, we are advancing restructuring programs throughout the Group with the aim to make the Lufthansa Group sustainably more efficient in all areas,” said Carsten Spohr, CEO of Deutsche Lufthansa AG.
In the first nine months of this year, the Lufthansa Group generated revenues of EUR 11 billion (previous year: €28 billion). Adjusted EBIT in this period was minus €4.1 billion (previous year: plus €1.7 billion). Net profit was minus €5.6 billion (previous year: plus €1 billion). The result was impacted by non-cash special items. This included, among other things, impairment losses of €1.4 billion on 110 aircraft or rights of use, which are not expected to resume operations.
At the end of September, the Lufthansa Group had €10.1 billion of cash at its disposal. This figure includes stabilization measures in Germany, Switzerland, Austria and Belgium totaling €6.3 billion, which have not yet been utilized.
Free cash flow adjusted for the IFRS 16 effect was minus €2.1 billion in the third quarter (previous year: €416 million), mainly due to customer reimbursements of ticket costs for corona-related flight cancellations amounting to €2 billion.
