“We Can Hold Out Longer” Lufthansa’s CEO on How Coronavirus Has Radically Upended the Aviation Industry
Mothballed Lufthansa aircraft in Berlin: "We are currently running through various scenarios for a smaller Lufthansa."
Foto: Michael Sohn/ APDER SPIEGEL: Mr. Spohr, what goes through your head when you see the numerous jets that Lufthansa has parked at the Frankfurt Airport because of the coronavirus?
Spohr: It worries me and makes me sad. It is a symbolic image of the unprecedented crisis we are all experiencing, not just airlines. We worked hard over the past few years to ensure that none of our planes is on the ground one minute longer than necessary. Now, we have had to park 700 of the 763 aircraft in the Lufthansa group.
DER SPIEGEL: Five years ago, a plane belonging to the Lufthansa subsidiary Germanwings crashed in the French Alps. Is the current crisis even worse for your company?
Spohr: You have never heard me say in recent weeks that the corona crisis is the worst crisis imaginable for Lufthansa. Yes, it is a crisis of unprecedented proportions, but it is mainly about money and jobs. At that time, it was a question of human lives. That Tuesday, five years ago, March 24, 2015, will remain the darkest day in our history at Lufthansa.
DER SPIEGEL: Competitors such as Emirates have announced they intend to decommission their entire passenger fleet. At what point will you be forced to take the same step?
Spohr: When I see the unbelievable demand for return flights - there are more and more of them almost every day – we will continue to fly as long as we can somehow get people back to Germany, Switzerland, Austria or Belgium. After that, we intend to maintain a minimum flight schedule on a lasting basis. It’s not so much for economic reasons – we want to continue to keep our base countries connected to the major European capitals and to the other continents. We want to ensure a minimum level of connectivity even during the crisis. This is also in the interest of the German economy, because we were once the world’s leading exporter – and hopefully we will be again after the crisis.
DER SPIEGEL: There are also other scenarios circulating internally at your company. Your engine maintenance subsidiary in Shannon, Ireland, sent out a memo to employees stating that Lufthansa would no longer be carrying out passenger flights as of the end of April and that operations would first recommence in September. Is that true?
Spohr: The scenario does not correspond to our current planning. For the time being, we plan to fly three international connections a day and 40 inner-European ones. That’s less than five percent of our previous schedule.
DER SPIEGEL: What will it cost to maintain this skeletal flight plan?
Spohr: We receive compensation for the return flights chartered by Germany’s Foreign Ministry. If we lose money on the rest (of the flights), we will bear those losses on our own. But this is negligible compared to what we are losing anyway, because we are barely generating revenues any longer.
DER SPIEGEL: In the few jets that are still in operation, passengers have often been crowded together. It has likewise not always been possible to observe the recommended separation of one-and-a-half meters on the buses taking passengers to the terminal after touchdown.
Spohr: That’s why we have decided that, moving forward, we will block the middle seat on all flights departing from Germany to create distance. And we have informed airports that we will no longer accept buses. On flights bringing stranded Germans back home, we will continue to use every seat. We can’t just leave people stranded abroad. Also, there hasn't yet been a single infection in the cabin of a Lufthansa jet due to the way the environmental control systems work.
DER SPIEGEL: Some Asian airlines are distributing disinfectants during boarding, but Lufthansa isn’t. Why?
Spohr: All the experts are saying it isn’t necessary. That’s why we have even given large quantities of disinfectants and protective masks to the German health-care system. The doctors and nurses at hospitals need them more urgently.
DER SPIEGEL: The International Air Transport Association (IATA) has predicted that more than half of all airlines will go bankrupt in the next few weeks if governments don’t take action to rescue them. Is that also true for Lufthansa?
Spohr: As chairman of the IATA Supervisory Board, I can confirm the volatility of the situation for the industry. But the Lufthansa Group has significantly more liquid assets and more stable finances than most of our competitors. That’s why we can hold out longer. One thing is clear though: If the crisis lasts as long as most experts are now assuming, there will be no global airline that does not have to turn to their home country or countries.
DER SPIEGEL: You currently have around 5 billion euros in liquidity at your disposal. How long will that money last?
Spohr: This liquidity is also the subject of claims. We are currently working on the reversal of booked tickets for our customers whose flights have had to be cancelled. We are also increasing the short-time working allowance for our employees so that individuals with lower incomes can make ends meet during the crisis. As such, our liquidity is continuously experiencing outflow, but we have virtually no more revenues. That’s why we are in talks with the federal government.
DER SPIEGEL: What kind of aid have you requested?
Spohr: In the short term, it is a question of liquidity. In the medium and long term, it is a question of the competitiveness of the European airline industry. We sense great determination in Berlin and in our home markets that Lufthansa should and must survive in the global competition. I cannot prejudge these talks publicly, but I am optimistic that we will find solutions.
DER SPIEGEL: Could you imagine the German government acquiring holdings in Lufthansa and partially nationalizing it?
Spohr: The federal government has already publicly denied nationalization. It’s a question of finding ways to ensure sustainability. We are talking with the federal government about the necessary measures. I don’t want to comment on this publicly before we have concrete results. We have a proven track record of being a profitable and competitive company. State aid is legitimate in such an exceptional case. But it is vital that our corporate independence, when it comes to decisions made and actions taken, is not compromised.
DER SPIEGEL: This week, you turned off the automatic online refund function for tickets. Does that mean that finances are already getting tight?
Spohr: No. Other airlines did this much sooner than we did. There has never been simultaneous reimbursement to millions of customers before. It has to be coordinated, which is why we have suspended the usual procedures for the time being, especially since we are already working on voucher solutions. Customer credit is safe with us, and it will be returned to them.
DER SPIEGEL: Airlines are all holding talks with Boeing and Airbus, the two major aircraft manufacturers. Are you pushing for delayed delivery or are you cancelling orders altogether?
Spohr: This crisis will be so great that all global airlines will have to replan their fleets. Within the next few years, we will not return to flying all 763 aircraft we had in operation before the crisis broke out. We expect there will be significantly fewer passengers. This means that we will also need fewer planes, and we will remove older jets that are less environmentally friendly from our fleets earlier than previously planned. We are discussing all of this with Airbus and Boeing.
DER SPIEGEL: If the airlines stop ordering aircraft, jobs at the manufacturers will also disappear.
Spohr: There is no getting around the question of how we can secure the future of the European aviation industry, including suppliers, manufacturers and airlines. Hopefully, we can clarify this together with the European Commission. If we as Europeans do not act prudently now, we will fall behind in the global competition between China and the United States as a result of the corona crisis. We have to prevent that – and this applies to Airbus, to Lufthansa and the entire air transport industry in Europe – and probably not only to our industry.
DER SPIEGEL: The U.S. government is planning to support its airlines with billions of dollars, and even faltering Alitalia is getting another 500 million euros in taxpayer money. Is the virus already distorting competition by keeping companies artificially alive that were already candidates for bankruptcy?
Spohr: There will certainly be airlines that profit from the crisis because they are rescued with state aid, although they would have had little chance of survival even without the corona crisis. In those cases, financial aid does come in handy. But the experience of recent years has been that those that aren’t competitive also won’t make it in the long run, even with state aid. The corona crisis is only interrupting the consolidation that was already underway.
DER SPIEGEL: You recently said that global air transport will look different after the crisis than it did before. In what sense?
Spohr: We assume that growth in air traffic will shift even more rapidly from business travelers to private customers. I am certain that after the crisis, private travelers will have even more desire to see the world again and enjoy freedom.
DER SPIEGEL: But so far, business travelers have accounted for the bulk of your profits.
Spohr: The modern means of communication, which we are now increasingly using in the wake of the corona pandemic, will certainly make one or two business trips obsolete in the future. And I believe that after this crisis, the global economy will not only be smaller overall, but that globalization will also be dialled back a bit. This will have a disproportionate impact on the air transport industry. That’s why we are currently running through various scenarios for a smaller Lufthansa. At the same time, we are doing everything we can to keep as many of our employees on board as possible. However, that will only be possible with innovative ideas, like comprehensive part-time work for all employee groups.
DER SPIEGEL: When do you anticipate being able to resume normal operations?
Spohr: We don’t know. The situation could last for three months, six months or even longer. But even after it starts up again, air transport will not be able to connect the world again from one day to the next. It will take years for the industry to return to pre-crisis levels.
DER SPIEGEL: Some politicians and economists are advising the German government to lift the contact bans and lockdown as quickly as possible in order to limit the damage to the economy. Would you agree with that recommendation?
Spohr: Unfortunately, we have a tendency in this country to scold politicians. I would like to counter that. I am impressed with the way politicians are currently responding. And I am very happy that I don't have to make the difficult trade-off between human lives and what an economy can bear. But I am also convinced: We must be prepared for the fact that the return to normality will take a very, very long time.
DER SPIEGEL: What advice would you give to vacationers who want to go on holiday with Lufthansa in the summer?
Spohr: Customers can book with us without risk. We are offering a flight schedule for the summer. If we aren’t able to operate those flights, customers will get their money back.
SPIEGEL: Frequent fliers fear for their miles status. Other airlines have already announced they would ease their policies, but Lufthansa has not. Is anything coming on that front?
Spohr: Absolutely. We will ensure that the crisis does not affect our most loyal customers. If only because we will need them much more after the crisis than before.
Update: This interview was originally published in German on Friday, March 27. On April 1, Lufthansa announced that it would send 87,000 of its employees into the German government’s Kurzarbeit, or short-time work program, under which working hours for employees are severely reduced or eliminated altogether and the government temporarily covers 60 percent of an employee's salary.
