The past year has been one that many airlines will be eager to forget. We all know the story by now. The global pandemic has hurt almost every sector in the aviation industry. With increasing vaccination rates, it is now time to learn to live with the virus, and as we do, airlines are reducing their losses and returning to profitability.
Lufthansa posted another loss for Q2, but things are slowly getting better. (Photo: Vincenzo Pace – Simple Flying)
Another loss, but things are getting better
For the second quarter of 2021, the Lufthansa Group posted another loss. However, things are slowly getting better. Year on year, the European airline group has cut its loss by half and, compared with the first quarter, the loss has reduced by €293 million.
Several elements contributed to this. Firstly, the airline’s revenue, and thus money coming into the airline, has been steadily growing. This quarter the airline group took in €3.2 billion, accounting for slightly over half of its revenue so far this year. However, the airline has also been looking to cut costs. From June 30th, 2020, to June 30th, 2021, the airline’s workforce reduced by 16% to 108,072.
The airline’s loss fell by half year on year. (Photo: Vincenzo Pace – Simple Flying)
Are passengers returning to the airline?
Passengers are certainly returning to Lufthansa Group airlines in droves. The airline carried roughly seven million passengers during the second quarter, up over 300% from Q2 in 2020, and a significant increase on the approximately three million carried in the first quarter.
This is something that the group is only expecting to get better as time goes on. Since early April, the group’s airlines have seen their bookings steadily increasing. Lufthansa was only operating at 29% of its pre-pandemic capacity in Q2. However, with 534 operational aircraft and an increase in demand, things should improve in Q3.
Most of the world can travel to Germany without any COVID-related restrictions. (Photo: mapchart.net)
What about Q3?
The airline expects its operating cash drain to stop in the third quarter, meaning more cash is coming into the airline than going out on any given day. From May to June, bookings originating in Germany increased by 48%, while bookings made in the US shot up a staggering 92%.
Lufthansa is seeing that more people want to travel in the third quarter thanks to reducing travel restrictions. According to Lufthansa, the number of countries with high levels of travel restrictions has eased from 85% in April and May to 63% in July. Demand can easily be shown by the Boeing 747-8 being drafted for two-hour intra-EU hops to increase capacity.
At the start of August, Germany significantly loosened its own travel restrictions. The RKI, Germany’s agency for disease control and prevention, took all but Brazil and Uraguay off of its variant area list, which means a mandatory 14-day quarantine, even if fully vaccinated. Additionally, the simple risk list is gone, making travel much more accessible to most of the world. Arrivals from high-risk areas must quarantine for at least five days unless fully vaccinated.
Cre: Simple Flying
Nguyen Xuan Nghia – COMM
