The German flag carrier, Lufthansa is cutting down on its investments and assets for long-term now. The airline recently said that it is going to ground 40 aircraft from its fleet because they feel that the demand for air travel is going to be very low for the next few years. Thus having a large fleet of aircraft will only add to the fixed costs of the airline without adding to the revenues. Lufthansa further said that it would be reducing its fleets of aircraft in other owned businesses as well. This includes airlines such as Austrian Airlines, Eurowings and Swiss.
Parked Aircraft A Big Problem For Every Airline
Richard Aboulafia, an aviation analyst at the Teal Group, said that the disaster with which the world is going through couldn’t be underestimated. It is going to destabilise the aviation industry, and there is no sugar-coating it. The aviation industry has bounced back from other disasters in the past, but this is a problem which is going to stay for an extended period now. Since the WHO (World Health Organisation) has declared it a global pandemic, things won’t be smooth for the aviation industry until the time WHO declares it not to be a threat anymore.
Global Demand For Airlines To Decrease
Even when there is a vaccine for coronavirus and things have boiled down a little, you can’t expect things to go back to normal right away. It will take at least two years for the aviation industry to reach the level of demand it had pre-crisis. Based on this evaluation, Lufthansa thinks it to be the right decision for the future of the airline. Also, the airline said that it would get in touch with the unions soon to determine what will be the best course to go about employing people in the future.