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Coronavirus: Lufthansa to cut more jobs and reduce fleet amid travel-industry slump

A Lufthansa airbus A 340 is pictured in a hangar at the airport in Frankfurt am Main, western Germany, on July 30, 2020. (Photo by Daniel ROLAND / AFP) (Photo by DANIEL ROLAND/AFP via Getty Images)
A Lufthansa airbus A340 in a hangar at the airport in Frankfurt am Main, Germany, on July 30, 2020. Photo: Daniel Roland/AFP via Getty Images

German airline Lufthansa (LHA.DE) announced on Monday that it had decided to implement further cuts to its fleet size and personnel, after air travel in the summer season was “significantly” lower than expected.

Frankfurt-based Lufthansa said in a statement today that it will reduce its fleet size by 150 aircraft, out of a total of 760. It will also retire its remaining eight Airbus 380s, after it took six of them out of service in spring.

Ten A340-600 airplanes will also be put into storage, with Lufthansa noting that “these aircraft will only be reactivated in the event of an unexpectedly rapid market recovery.” In addition, it said the remaining seven Airbus A340-600s will be permanently decommissioned.

Shrinking its aircraft fleet will result in write-downs of €1.1bn (£1bn, $1.3bn) in the current quarter, the airline said. It said it will reduce its cash burn by €100m per month from its current outflows of €500m per month during the 2020-2021 winter period.

Watch: Air travel in the doldrums until 2024, says Lufthansa

The German flag carrier said it will likely fly at between about 20% and 30% of its pre-coronavirus levels this year.

Lufthansa also announced that more full-time positions will be lost, in addition to the 22,000 that it announced earlier this year, and that it is in discussions with employee representatives regarding staff reductions and compensation.

“A streamlined management structure with a 20 percent reduction of management positions is to be implemented in the first quarter of 2021,” Lufthansa said.

Lufthansa shareholders in June agreed to a €9bn German government bailout, with the government taking a 20% stake in the airline and getting two seats on the supervisory board.

European Union regulators also signed off on the airline’s €6bn recapitalisation plan in June, on the condition that there will be a ban on dividends, share buybacks and acquisitions until it has paid back its state aid.

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Lufthansa also complied with the EU Commission’s demands to relinquish some landing slots at its hub airports of Frankfurt and Munich to competitor airlines.

READ MORE: German and Dutch governments put up billions to save airlines

The Dutch government allocated €3.4bn to the bailout of the Air France-KLM (AF.PA) airline alliance in June, after France got EU approval in May to offer a €7bn bailout to Air France. In total, the partner airlines are set to get €10.4bn in state support.