Airline industry may not survive without state aid: Lufthansa

Lufthansa said that the airline industry may not survive without state aid if the coronavirus epidemic lasts for a long time, as it throws everything at bringing home stranded travellers and keeping industrial supply chains open.

The German airline group has slashed capacity, proposed short-time working and suspended its dividend, saying it was impossible to forecast the impact of coronavirus on profitability.

The desperate outlook came as airline turmoil deepened on Thursday, with Australia's Qantas Airways Ltd telling most of its 30,000 employees to take leave and India preparing a $1.6 billion rescue package to aid carriers.

"The spread of the coronavirus has placed the entire global economy and our company as well in an unprecedented state of emergency," CEO Carsten Spohr said in a statement. "At present, no one can foresee the consequences."

Lufthansa, which also owns Swiss International, Austrian Airlines and Brussels Airlines, has carried out and planned 140 relief flights to repatriate stranded citizens in what has been described as the biggest operation of its kind.

"In addition, we are doing our utmost to help ensure that supply chains for many thousands of businesses do not break down by mobilising additional capacity for air freight transport," said Spohr.

Lufthansa has already held talks with the German government on providing liquidity, including through special loans from state development bank KfW.

"The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid," said Spohr.

FLIGHTS HALTED

As governments across the world close borders and airports, the Lufthansa Group has been forced to make drastic cuts in its flight operations.

Austrian Airlines is suspending operations until March 28, with the exception of special flights, after its last regular scheduled flight to Vienna landed on Thursday.

Lufthansa is also discontinuing long-haul flights from Munich and for now will only offer long-haul flights from Frankfurt, it said, announcing a reduction of passenger flights by 95% overall.

Around 700 of Lufthansa Group's 763 aircraft will be temporarily parked. Some passenger planes may be redeployed to shift freight.

In order to secure its finances, the Lufthansa Group said it had raised an additional 600 million euros ($650 million) in recent weeks, giving it liquidity of around 4.3 billion euros.

In addition, it has unused credit lines of around 800 million euros and is looking to raise further funds, including through aircraft financing.

"We own 86 per cent of the Group's fleet, which is largely unencumbered and has a book value of around 10 billion euros," said Chief Financial Officer Ulrik Svensson.

The executive board will take a 20% pay cut, Lufthansa said, confirming 2019 results released on March 13.