Federal government to plug new billion-euro hole in air traffic

federal government to plug new billion-euro hole in air traffic

Lufthansa boss carsten spohr says he does not need any more corona government aid in the medium term.

Although the mdax group had to present deep-red figures this thursday for the otherwise lucrative summer quarter, it is in an excellent position compared with other companies in the sector thanks to state aid. Despite all the problems, more than 10 billion euros in liquid reserves is still a huge sum to get the kranich group through two hard winters if necessary.

Neither most german airports nor the federally owned german air traffic control (dfs), whose finances will be the main focus of the federal government’s virtual "air traffic summit" this friday, have that much time. Transport minister andreas scheuer (CSU) wants to give the airports a billion-euro injection and is hoping for the finance minister’s agreement.

According to the associations, the situation is more than serious. "There must be no irreparable structural changes," says matthias von randow, chief executive of the german air transport association BDL. "We are facing job losses with the second de facto lockdown. From around 260.000 jobs at the german airlines alone, and at the airport there are currently around 60 jobs.000 are threatened."

As an "important sign and first step," the federal government must reimburse the airport for the costs incurred in the first lockdown for keeping the infrastructure open as politically intended, says ralph beisel of the german airports association (ADV). 740 million euros in maintenance costs – a sum that will primarily benefit small and medium-sized airports.

The discussions will also have to deal with the participation of the federal states, which often own the airport together with neighboring municipalities. Even before the crisis, very few operating companies were making a profit. The outlook is correspondingly bleak with flight operations reduced for years to come. Paderborn-lippstadt airport has already entered insolvency in self-administration, with other locations soon to follow.

For many environmentalists, the german structure with 21 international commercial airports and 10 regional commercial airports and landing sites is far too lavish anyway. There are six international commercial airports in north rhine-westphalia alone, with the easternmost one in paderborn less than 100 kilometers from the north hessian million-dollar grave of kassel-calden offering its services.

The VCD, an ecologically oriented transport association, believes that traditional structures should not be cut back with billions of euros in aid. "Instead of further expanding airports and sinking more money into regional airports that were already unprofitable before the pandemic, we need a social contract-based restructuring in the direction of environmental connectivity," comments VCD president kerstin haarmann. State aid should only be given to companies that meet clear climate requirements and have a sustainable business model, explained the green members of parliament sven-christian kindler and daniela wagner. This is not the case with many regional airports.

The federal government should also provide some of the artificial aid to ailing airports in the form of repayable loans, which could possibly be converted into ownership shares. This is what the federal government’s aviation coordinator, thomas jarzombek (CDU), has proposed. He told the "rheinische post": "we want to maintain the infrastructure. But if the general public helps, it should also end up with the money back with interest." In the case of the bonds, the state became a shareholder if the money was not repaid.

Another topic at the summit is the federally owned deutsche flugsicherung gmbh, which could run into liquidity problems because of the current shortfall in charges. DFS chief klaus-dieter scheurle had put the revenue shortfall at up to 2 billion euros by 2025. Despite a new promissory note loan of 500 million euros and cost-cutting measures, the company still needs help, which the BDL has put at 1.2 billion euros. The federal government must step in as owner: "otherwise, unrealistically high charges would have to be levied when air traffic started up again, which the airlines could not afford," von randow said.

At this point, lufthansa also benefited indirectly, as it did with the demand to waive the air safety fees that had been deferred during the crisis. Ahead of schedule, the crane flies into the corona winter 20/21 with the ballast of a further billion euro loss. Write-downs on jets no longer needed and on kerosene contracts have increased the loss for the third quarter to just under 2 billion euros, as the group reported in frankfurt on thursday. After nine months, the bottom line is already a loss of 5.6 billion euros on sales of 11 billion euros.

In the current final quarter, lufthansa flight operations will continue to reach at most a quarter of their former capacity due to the corona pandemic. Lufthansa, however, expects advantages from its established hub system, especially in frankfurt, since many point-to-point connections in europe were no longer profitable and competitors had discontinued their services. In addition, the airline plans to use more converted passenger jets again due to the high demand for cargo and to profit from the distribution of anti-corona vaccines. Lufthansa cargo and the group subsidiary swiss are global leaders in the temperature-controlled transport of medicines, said chief executive officer carsten spohr when presenting the interim financial statements.