Following a sobering €1.2 billion ($1.3 billion) pre-tax loss for the first three months of the year, Lufthansa Group has said that “the sale of individual non-core business units is being examined in the medium term”.
This immediately prompted analysts to ask about the future of Lufthansa Technik, and whether the maintenance arm would be the subject of an IPO.
“At this stage…there are no discussions at all on any IPO things,” responded Lufthansa’s chief financial officer, Ulrik Svensson, in a recent earnings call.
He added that in five years’ time, “I'm convinced the majority of the ownership of Lufthansa Technik will still be within the Lufthansa Group.”
This raises the possibility that Lufthansa is considering a partial sale or partial rights issue, although the group would probably wait until the market is a little stronger before doing so.
Another reason to wait is that Lufthansa Technik is one of the few revenue-generating parts of the business at present.
However, while acknowledging that “right now, MRO is busy”, Deutsche Lufthansa chairman Carsten Spohr, warned: “Let's see a week from now how many planes there are left owned by airlines which can afford to do MRO, including our own aircraft.”
Spohr also noted that Lufthansa Technik was preparing like its parent airline to put many staff on short-time work – kurzarbeit – to help cut costs.
This is part of efforts, including big cuts to capital expenditure, to protect the group’s liquidity and position it to pay back the billions of state-backed loans and other support the Lufthansa is in line for.
What part Lufthansa Technik is to play in those efforts remains to be seen, although Spohr indicated that the MRO provider retains great affection within the group.
“We still believe it's right to focus the airline group on airlines rather than a broad aviation group, but we still think we are very glad to have Lufthansa Technik in the portfolio. And this was true a year ago, and I think it's true now, and it will be true a year from now.”
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