Lufthansa has today announced immediate and sweeping measures to cut costs in the wake of the COVID-19 novel Coronavirus outbreak which first emerged in mainland China on January 9 and has since spread to Europe with authorities struggling to contain the spread of the virus in northern Italy. The announcement comes less than 24-hours after Harry Hohmeister, a member of the Lufthansa executive board said the outbreak was “hurting” the carrier.
Plans to hire new staffers across the business will be immediately suspended, while new hire flight attendants who were undergoing their initial training have been sent home after their offer of employment was withdrawn.
The Lufthansa Group, which includes Austrian, SWISS and Eurowings, had been planning to hire up to 4,500 new staff throughout 2020, including at least 1,300 flight attendants. The majority of new hires were expected to join Lufthansa’s mainline brand and SWISS.
In a statement, Lufthansa said it hopes to be in a position to offer some of the laid-off new hire employees their jobs back once the situation has improved.
Meanwhile, employees are being offered unpaid leave effective immediately. A spokesperson for the airline could not immediately confirm whether the request to take unpaid leave only affected flight attendants or whether ground-based staff and office workers would also be expected to take sabbaticals.
Lufthansa says the measures announced today will help it cut material costs by as much as 20 per cent. The airline currently has 13 planes grounded after cancelling all of its flights to mainland China and reducing frequencies to Hong Kong.
Services to mainland China are currently suspended through March 28 but those cancellations could be extended as the situation in the country develops.
In an interview with German business publication Handelsblatt, Hohmeister said cancelling flights to China was “hurting” the aviation group. The former chief commercial officer said Lufthansa was preparing various scenarios depending on how the outbreak develops.
Last week, the International Air Transport Association (IATA) estimated that the Coronavirus outbreak could cost the global aviation industry around $27.8 billion in lost profits in 2020. That prediction was based on a SARS-like recovery where air traffic and passenger demand quickly returned to normal after the outbreak was contained.
Several prominent Asian airlines, including the likes of Cathay Pacific and Korean Air, have already announced cost-cutting measures such as recruitment freezes and the offer of unpaid leave in response to the Coronavirus downturn. Lufthansa is believed to be the first European airline to announce such drastic measures.
