Lufthansa to close budget carrier Germanwings as coronavirus forces overhaul
Lufthansa will close its low-cost subsidiary Germanwings as the flag carrier seeks to overhaul its business in response to the coronavirus crisis.
The move came as the airline warned that it could take years for the airline industry to get back to pre-coronavirus levels of service.
In a statement, Lufthansa said: “It will take months until the global travel restrictions are completely lifted and years until worldwide demand for air travel returns to pre-crisis levels.
“Based on this evaluation, the executive board has decided on extensive measures to reduce the capacity of flight operations and administration long term.”
In addition to closing the budget airline, Lufthansa, which also owns Austrian Airlines, Swiss Air and Eurowings, said that it will cut capacity at its hubs at Frankfurt and Munich airports.
The airline will also decommission 40 of its planes in response to the crisis.
Since the coronavirus outbreak began, Lufthansa has grounded 90 per cent of its fleet and is in talks with the German government over potential financial assistance.
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Cutting budget carrier Germanwings may free up cash for the airline, which has furloughed 90,000 workers and scrapped its dividend.
In a memo seen by the Financial Times, the airline warned that in the worst case scenario it would only be able to increase capacity to 25 per cent of pre-crisis levels by October.
The decision comes after the International Air Transport Association warned that up to 25m jobs could be at risk from the industry’s collapse.
Chief executive Alexandre de Juniac reiterated calls for governments to step in to prop up the beleaguered sector, as well as calling for an exemption from refunds to passengers.
This morning a French transport minister said that around €6.5m in loans was being discussed to help out national carrier Air France-KLM.
Jean-Baptiste Djebbari said talks with taking place between the French finance ministry and members of the Dutch government.