Lufthansa hopeful it will not need a new state aid package

Lufthansa Group is optimistic that the roll-out of COVID vaccines will spark a vigorous recovery in the market during the second half of the year, allowing the German group to avoid using all of its EUR9 billion euro (USD10.9 billion) state bailout, Chief Executive Carsten Spohr said during the Aviation StraighTalk webinar hosted by Eurocontrol. “Until this point, we only took EUR3 billion (USD3.6 billion) [of the bailout] and I actually don’t think we will need the whole EUR9 billion, depending on how the year will play out. But that was just the maximum amount,” Spohr underlined. He added that the group will seek to repay the aid as quickly as possible, in part to allow the government to exit its shareholding. “One way or another, 2021 will be the year of recovery. Somewhere between the second and the third quarter, the vaccination effect will come into place. Hopefully, quarantines will be pushed back by vaccination and testing. And that will give us sharp recovery around the summer period,” Spohr said. In the short term, Spohr forecasts concentration of connecting traffic at the largest hubs due to depressed demand on feeder routes. As such, Lufthansa’s Frankfurt Int’l hub stands to benefit. However, going forward, he predicts that passengers will return to smaller hubs, enticed by greater comfort. As such, Lufthansa Group plans to continue operating across all five of its hubs – Munich, Brussels National, Zurich, and Vienna. Spohr added that the group’s multi-hub strategy was also an important factor in keeping the airports in check. “Airports are local monopolies, so in order to make them compete, you have to have a multi-hub strategy and the ability to re-route connecting traffic,” he underlined. While Spohr underlined that Lufthansa’s state aid was among the lowest in Europe in proportion to the group’s pre-pandemic revenues, Ryanair Holdings remains unconvinced. As reported by The Irish Times, the low-cost carrier group filed in the European Union General Court on January 22, 2021, a formal complaint against the aid given to Lufthansa. “It is extraordinary that Lufthansa announced it did not need so much state aid, yet the German government was committed to favouring its ‘global champion’ instead of putting measures in place to support air traffic recovery in a manner that would benefit all airlines delivering traffic at German airports,” Ryanair said.