Lufthansa Inches Toward Restart, Seeks German Government Bailout

European airlines are beginning to see faint glimmers of economic sunlight and preparing to come out of their coronavirus hibernation.

Deutsche Lufthansa AG DLAKY on Friday said group airlines Lufthansa, Eurowings and SWISS will collectively reactivate 80 aircraft for June, doubling the operational fleet size to serve a total of 106 destinations. IAG Group this week said it plans to ramp up passenger service in July on the expectation that travel restrictions will ease and more people will start flying again. Both airlines have shrunk flight operations to less than 10% of their pre-crisis level as the pandemic caused the travel market to collapse.

Most of the Lufthansa Group aircraft currently in service today are flying cargo or rescue missions for governments and travel operators to bring home tourists and other travelers stranded abroad by coronavirus travel bans. Lufthansa operates a dedicated fleet of freighters and is using many passenger planes for dedicated cargo operations too.

With the outbreak past its crest in Europe, Lufthansa said it will gradually expand its flight schedule each month as Germany and other European countries loosen travel restrictions and open borders 

"We sense a great desire and longing among people to travel again. Hotels and restaurants are slowly opening, and visits to friends and family are in some cases being allowed again. With all due caution, we are now making it possible for people to catch up and experience what they had to do without for a long time. It goes without saying that the safety and health of our guests and employees are of the highest priority," said Harry Hohmeister, the head of commercial passenger airlines at Deutsche Lufthansa AG, in a statement.

Starting in June, Group airlines will again fly to leisure destinations in Mallorca, Spain; the German island of Sylt; Rostock, Germany; and Crete, Greece. The June flight schedule will be published within a week.

The company cautioned travelers to prepare for longer wait times at airport security checkpoints as authorities impose stricter hygiene regulations. And catering services on board will also remain restricted until further notice.

Earlier this week, Lufthansa Group began requiring all passengers to wear face masks to help protect passengers and crew members from infection.

Meanwhile, the parent company disclosed this week that it is negotiating with the German government for an emergency financial aid package worth 9 billion euros ($9.7 billion) to help fund operations and payroll until revenues pick up in a meaningful way.

Germany privatized Lufthansa in the late 1990s.

The relief package would include a secured loan and a non-voting equity stake of up to 25% for the government. Lufthansa would also be required to suspend future dividend payments as part of the deal.

Lufthansa officials have warned the company may file for bankruptcy without stabilization aid. An issue under debate is the government's request for two board seats, which could give the government a say in how many workers to retain or other policies.

Most of Lufthansa's workers are on leave and receiving aid under a government safety-net program.

The International Air Transport Association has said governments need to do more to help airlines get through the worst crisis in aviation history because of the enormous number of jobs involved and because air travel is critical to reviving the global economy.

Photo: Lufthansa Airlines