Lufthansa, Europe’s largest airline, seeks government aid as it faces coronavirus-related debt.
Airline in Trouble
2020 has not been a good year for airlines. The sector is one of the worst affected by coronavirus as countries worldwide have implemented travel bans. The industry has suffered job cuts, furloughed staff and a huge dip in share value. With no finishing line in sight, the situation is worsening. Rumours of a 14-day quarantine period for anyone arriving to the UK will be the final straw, 鈥渃ompletely [shutting] off the UK from the rest of the world鈥�, according to the British Transport Secretary. Coronavirus could also mean an end to cheap flights. If social distancing measures are taken seriously, airlines will reduce the capacity of planes by a minimum of 50%.聽
Lufthansa
The Lufthansa Group, one of the world鈥檚 largest group in , got off to a strong start. Last year they broke company records for the number of passengers as well as experiencing a hiring boom. The previous year, they generated approximately 鈧�35.8 billion.聽
Now, like other airlines, they are haemorrhaging cash. It is reported that the German airline is close to declaring insolvency. Lufthansa dropped from a pre-coronavirus average of 350,000 daily passengers to fewer than 3,000. The pandemic forced the airline to ground 700 of its aircrafts. Subsequently, passenger numbers have dropped by 99%. The airline group loses approximately 鈧�1 million euros in liquidity reserves every hour.聽
Financial Aid聽
The airline company is desperately seeking financial aid. They need a purported 10鈧� billion to dig them out of their current hole. Recent reports indicate that the airline group is close to closing a deal with the German government to provide state aid. This deal would involve the government taking a 25.1% stake in the airline. The German government would not be fully responsible for the bailout. A further 鈧�3.5 billion would be provided by state-owned bank (Kreditanstalt f眉r Wiederaufbau) as well as possible contributions from Switzerland, Austria and Belgium.
