Lufthansa, Heathrow Airport see delayed rebound as virus flares

Deutsche Lufthansa AG reined in capacity plans and London’s Heathrow airport lowered passenger forecasts as new waves of coronavirus infections dent prospects for a travel rebound by the start of summer.

Lufthansa now expects to offer only 40% of its pre-pandemic capacity for 2021 as a whole, according to a statement Thursday, a figure that’s below the level it has said is needed to generate positive cash flow. Heathrow cut its outlook to as few as 13 million passengers, less than the number it attracted last year.

Airlines and the hubs they serve are wrestling with an uncertain outlook as governments work toward reopening travel while the virus surges in countries such as India. Europe remains in the grip of the pandemic amid a sluggish vaccine rollout, with the International Air Transport Association forecasting that the region will be the slowest worldwide to reduce losses this year.

Lufthansa shares were trading down 1% as of 9:03 a.m. in Frankfurt. The German airline, Europe’s biggest when flying a full schedule, posted a first-quarter operating loss of 1.1 billion euros loss ($1.3 billion). Closely held Heathrow had an adjusted pretax loss of 329 million pounds ($459 million).

Lufthansa Chief Executive Officer Carsten Spohr said that with travel restrictions still in place in most parts of the world, a “significant market recovery” won’t come until the second half as inoculation programs progress, with only a gradual pickup in demand expected before then.

The group’s individual carriers, which include Austrian Airlines and Swiss, will therefore ramp up flights later than previously planned to reflect the delayed lifting of curbs, he said. The full-year capacity estimate is at the bottom end of a previous 40% to 50% range.

Long-Haul Hit

Heathrow, which is heavily reliant on the long-haul flights worst hit by the crisis, said it’s expecting a passenger tally somewhere between 13 million and 36 million, compared with a previous estimate of 37.1 million issued Feb. 24.

The hub handled 22 million passenger in 2020, buoyed by three months of near-normal operations before the virus led flights to be grounded, and 81 million in 2019.

European operators are closely monitoring plans to resume flights in the U.K., usually the region’s biggest aviation market.

Heathrow CEO John Holland-Kaye said it’s vital Britain restarts international travel from May 17 as announced. Though the government plans to say how far flights will be reopened early next month, there’s concern that only a handful of destinations will be on a “green list” where no quarantine is required.

Airbus Gloom

Heathrow’s investors including Spanish builder Ferrovial SA, the Qatar Investment Authority, private-equity firm Alinda Capital Partners and China Investment Corp.

Planemaker Airbus SE CEO Guillaume Faury said Thursday that the first quarter showed “the crisis is not yet over for our industry,” adding that the market “remains uncertain.”

Lufthansa reduced its monthly cash drain to 235 million euros in the first three months, though that was aided mainly by strong cargo demand, and sees a drop to 200 million euros this quarter. Spohr reiterated that he expects a lower operating loss for the full year.

The group was able to offer only 21% of its 2019 seating level in the first quarter, when its airline brands flew 3 million people, down 90% on the pre-crisis number. Heathrow’s tally of 1.7 million passengers was 91% lower.