Investing.com - The largest airline in Germany on Thursday gave food for reflection to those who want to resume bidding, revising their forecast towards the decline and stressing that the fate of the entire sector this year is in the hands of European politicians who have not been able to deliver vaccines to people .
Deutsche Lufthansa stated that in 2021 it expects a second operational loss in a row, although much less than 5.5 billion euros last year. In the first quarter, CEO Classified Director of Carsten Spurs said that it expects losses in the amount of 300 million euros.
As it often happened in the past, this year the airline will have more aircraft than it is necessary: this year it will produce only 40-50% of flights from its extrapendamic power, whereas previously it was assumed that they would constitute up to 60%. Lufthansa believes that to obtain a positive operational cash flow, it needs to use more than 50% of bandwidth.
"Our business restores more slowly than we originally hoped," Schort said.
The airline was also disappointed in the long run: it does not expect transportation volumes will return to the levels that existed to COVID-19, at least until the middle of the decade. Previously, the company expected that by 2024 her business would return to the level of 2019. As a result, the company expects to write off more of his old aircraft.
All this was published with a report on a record pure loss of 6.7 billion euros ($ 8.0 billion), which the market has already taken into account. Lufthansa shares fell 1.4%, which made it worse among the largest European airlines per day.
It is amazing that at the beginning of the press release of Lufthansa there was a call for the European Union to create "world-recognized digital certificates on vaccination and tests for Coronavirus" so that people can again travel, without fear of becoming infected with COVID-19 in the closed cabin of the aircraft.
"Such schemes should come to replace the trips and quarantine," said Spur. Interestingly, the largest shareholder of Lufthansa is the German government - possibly the biggest obstacle to these schemes, since at the EU summit last week it pushed calls for countries such as Greece and Spain, the economy of which more depend on tourism.
On Monday, the European Commission stated that it would soon begin to develop a draft law establishing "digital green skipping" for the entire EU, but this is hardly satisfied with Madrid or Athens if the scheme is not expanded due to the inclusion of Great Britain.
The Euronews channel reported on Tuesday that this plan would probably require at least three months of technical work and should remove concerns from confidentiality of data and ending with discrimination and protection against fake. This chart leaves very little time, if it will be useful for resting and those who are looking for seasonal work abroad.
So - does this mean that enthusiasm about the shares of European airlines is inappropriate? The Stoxx Total (PA: TOTF) Market Airlines rose by more than 60% since the PFizer vaccine breakage (NYSE: PFE) and Biontech (NASDAQ: BNTX), and companies such as International Airlines Group (LON: ICAG) and Wizz Air Holdings PLC (LON: WIZZ) on Thursday rose again, which is invalid by any forecast for a wider sector. More importantly, this is what the data collected investeing.com shows that the shares are still protected by low absolute and relative estimates: European airlines shares are traded by an average of 0.22 times higher than the sale price. Comparimative ratio for airlines from the USA - 1.
Despite this, Lufthansa's warning should serve as a reminder that the tourist sector will not be able to recover until the virus will be defeated, and that the victory over the virus depends on how sharply the EU will improve its vaccination indicators. The three of the countries are most advanced in the country's vaccination - United Kingdom, Norway and Serbia are greatly different from the profile and have little common, except that they are not members of the EU.
Author Jeffrey Smith
Read Original Articles on: Investing.com