Lufthansa and its group carriers will operate no more than 50% of capacity by the end of the year and two-thirds of the 2019 level in 2021.
Carsten Spohr, Lufthansa group chief executive, laid out cautious recovery plans as he reported a half-year loss of €3.6 billion to June.
Spohr noted: “Customer demand is only improving on a low base. Just a few days ago the World Health Organisation warned the effects of the Covid-19 pandemic are likely to be felt for decades.
“We share the view of Iata that a return to the pre-pandemic level cannot be expected before 2024. Our whole industry needs to adapt.”
However, Spohr insisted the crisis “gives an opportunity to stop aiming for growth at any price. The Lufthansa group is determined to take this restructuring opportunity.”
He hailed a reduction in airport charges across the group’s hub airports, with the exception of Frankfurt, and warned the German airline could no longer avoid compulsory redundancies as it seeks cut 22,000 job cuts.
Spohr said: “With one exception, Frankfurt, all our hub airports have offered a reduction in charges and this is now where we focus growth.
“We negotiated new landing fees in Zurich and Vienna. We are in negotiations with Brussels and with Munich. When we allocate our traffic streams, we will take this into account.”
He reported the return of passenger traffic was so slow that “we currently have passenger routes where the passenger load is zero and we break even because of high cargo revenues”, and warned: “Not even the best restart programme will restore passenger confidence.
“People are still cautious. The main reason is the remaining travel restrictions.”
In the circumstances, he said: “We welcome the expansion of Covid-19 tests for passengers. People who test negative for Covid should be allowed to travel.”
Germany has introduced mandatory tests for travellers from countries with a higher risk of Covid infection.
Spohr insisted “The Lufthansa Group will be smaller than today. We wished to avoid compulsory redundancies, but this is no longer possible and we told that to our staff in Germany. We expect to operate only two-thirds of our 2019 capacity in 2021.”
The group “expects to reach about 50% of 2019 capacity” by the end of the year, but warned: “Loads and yields will remain under pressure because of low customer demand and a lot of capacity returning to the market.”
Lufthansa has previously reported it would cut 100 aircraft from its fleet by 2023.
Spohr reported the group’s liquidity position prior to agreeing a €9 billion aid package with the German government was “enough to ensure against insolvency, but not enough to secure the group as a going concern”.
He noted the total state aid received by the group was €11.8 billion with the “measures agreed in Switzerland, Austria and Brussels”.
Spohr said: “The government package allows us to optimise on a long-term not a short-term basis.” But he said: “This is not a gift. Complete repayment of the loan will place a burden on the company for years to come.”
Lufthansa reported it paid €1 billion in cash refunds to consumers in July and €2 billion in the year to date, leaving “refunds of slightly less than €1 billion still due” in August.
Asked when travel to the US might resume, Spohr said: “It’s hard to predict. I plan to take my family to California in October and am hoping to be able to go. But who knows? No one does. Definitely short-haul will recover before long haul.”
The Lufthansa Group includes Swiss, Austrian Airlines, Brussels Airlines and Eurowings.