German airline Lufthansa posted a net loss of €2.1 billion in the first quarter, writing down the value of assets as the coronavirus pandemic hits the travel sector.
The loss, which compares with a net loss of €342 million in the year-earlier period, was driven by write-downs of €266 million on its fleet, as well as write-downs on the book value of catering business LSG North America by €100 million and on budget unit Eurowings by €57 million, the carrier said on Wednesday.
Lufthansa, which had grounded almost all its aircraft at the height of the coronavirus pandemic, confirmed a loss before interest and tax of €1.2 billion during the first three months of the year, first reported in April.
The airline is bracing for a significant decline in 2020 earnings before interest and tax, adjusted for one-off items, from the €2 billion reported last year, saying demand was only gradually recovering and that it was unable to be more specific amid uncertainty over the pandemic.
The group’s non-executive board on Monday approved a €9 billion government bailout that will force it to cede some of its prized landing slots to rivals.
Under the plans, the German government will take a 20 per cent stake in the airline, which could rise to 25 per cent plus one share in the event of a takeover attempt, as well as two seats on its supervisory board.
Lufthansa will also be obliged to transfer to rivals up to 24 take-off and landing slots at its hubs in Frankfurt and Munich.
Analysts expect the national carrier to be removed from Germany's benchmark blue-chip index DAX of which Lufthansa has been a constituent since the gauge's inception in 1988. Stock exchange operator Deutsche Boerse is expected to decide the relegation on Thursday. – Reuters