Desperate times call for desperate measures. In the light of the ongoing pandemic, Lufthansa Group, one of the largest airline group in the world, has decided to immediately decommission at least 43 aircraft, about 6% of its total fleet size, in the first restructuring plan. These mostly include the inefficient quad-engine jets – five Boeing 747-400s (following the footsteps of KLM and Virgin), six A380s, three Airbus A340-300s, seven A340-600s, and eleven short-haul Airbus A320s. These actions will reduce capacity at Lufthansa’s hubs in Frankfurt and Munich, the company said.
Furthermore, operations at Germanwings will be discontinued with a further ten Airbus A320s phased out at parent company Eurowings. Fleet sizes will also be permanently reduced at Lufthansa Cityline, which is a regional carrier operating flights to tourist destinations, as well as at Austrian Airlines and Brussels Airlines. Swiss International Airlines will adjust its fleet size by delaying deliveries of new short haul aircraft (most notably, the A220s series aircraft) and potentially phasing out older aircraft ahead of schedule.
According to Lufthansa, it is speculated to take several months, possibly years, for passenger demand to return to levels seen before the coronavirus pandemic. The statement given by Lufthansa stated:
‘By its estimation, it will take months, before the global travel restrictions are fully lifted and years before worldwide demand for air travel corresponds to the pre-crisis level.’
Lufthansa has already made it clear that this catastrophe has been among the worst that has ever hit the aviation industry, and in the light of the same, the Group has also grounded almost 700 out of the 763 aircraft in its fleet. In a flurry of groundings, unpaid leaves and job cuts, and now, the discontinuation of its subsidiary, Germanwings, the Group has stated that it shall arrange talks with unions and workers councils to discuss new employment models in order to keep as many jobs as possible.
The restructuring of the fleet and airlines is a sensible business decision, given the fact that Lufthansa ultimately needs to preserve cash and maintain liquidity in these times of turmoil, which shall naturally be the goal for all airlines globally. On one hand, Lufthansa has numerous sophisticated Airbus A320neo series aircraft on order, which liberates them to scrap the older inefficient jets, while on other hand, the current cash limitations and limited market prospects mean that they cannot purchase these jets as of now.
Accordingly, reducing fleet size temporarily definitely looks like a viable survival option presently, given the fact that the fleet size will grow as the demand increases, and additions to the paraphernalia will be the efficient and modern jets, thereby, leading to a more profitable future.
What do you think of Lufthansa’s decision? Do you think retiring the quad-engine giants and discontinuing Germanwings is a sustainable move for the Group? Let us know in the comments!
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