Write-Downs Hit Lufthansa Technik Results
The coronavirus crisis is having a “drastic impact” on Lufthansa Technik, the world’s largest MRO provider has said.
The company suffered an EBIT loss of €116 million ($137.8 million) in the third quarter, versus a €116 million profit in the prior-year period.
“Flight hours planned but not carried out, growing pressure on airlines and the resulting retirement and decommissioning of aircraft are having a drastic impact on Lufthansa Technik,” the company said.
EBIT for the first nine months of the year was negative €309 million, which the company said was largely due to write-downs of receivables and spare parts, the latter of which have suffered a collapse in demand due to lower maintenance volumes.
Last week engine lessor Willis Lease Finance reported that its spares parts inventory was growing as demand fell.
However, Lufthansa Technik said it was able to more than offset write-downs in the third quarter with cost-cutting measures, such as short-time working and the deferral of investment projects.
Operating expenses declined 45% in the third quarter, though revenues were down 58%.
Of course, the MRO company’s woes pale in comparison with that of parent company Lufthansa, which posted a €2.4 billion EBIT loss for the third quarter and is deeply in debt following a €9 billion bailout.
Lufthansa’s second-largest shareholder after the state, Heinz Thiele, has called for the majority of Lufthansa Technik to be sold “if the price is right” according to German newspaper Handelsblatt.
However, Lufthansa CEO Carsten Spohr has indicated that he only wants to divest a minority stake.