Lufthansa Technik says it has been “hit hard” by the Covid-19 pandemic, with 2020 revenue tumbling by 43 per cent year-on-year to €3,747 million.

Adjusted EBIT dropped deep into the red, from €463 million in 2019 to €-383 million in 2020.

The suspension of the majority of air traffic worldwide as a result of the reaction to the Covid-19 crisis was the main cause of the poor results. Lufthansa Technik noted that the extensive downtime and decommissioning of commercial aircraft resulted in the postponements of maintenance events and a steep slump in demand for MRO services.

The company added that capacity utilisation of its engine and component services temporarily fell “by well over half”.

As a result, Lufthansa Technik said it had to reduce its workforce. Including external staff, the number of employees worldwide declined by more than 3,000 in the wake of the crisis – a reduction of 12.5 per cent compared with 2019. The number of in-house staff fell by 5 per cent to 22,745 at the end of 2020, while around 1,900 temporary workers were let go.

Other cost saving measures included numerous investments being stopped or postponed. Expenses for investments were €152 million, significantly lower than the €313 million of 2019.

“The year 2020 was the toughest in our company’s history to date. And yet we can end it with some confidence,” said Lufthansa Technik’s CEO Dr. Johannes Bussmann (pictured, top). “Our broad product portfolio and global network have saved us from an even worse fate. We have managed to retain almost all of our customers. Our partnerships, some of which go back many years, have proven to be stable, enabling us to win numerous new orders despite the situation. Under the circumstances, we made the best of this year.”

In fiscal year 2020, Lufthansa Technik had more than 4,500 aircraft under exclusive contracts. Over the course of the year, the company won 16 new customers and concluded more than 500 new contracts with a total volume of €2.3 billion for 2021 and the following years.

The company also noted that its broad international positioning helped alleviate some pressure – where demand was minimal in some regions it was “already beginning to stabilise” in others. “Although the broad product portfolio was not enough to offset the considerable economic consequences of the pandemic, it did mitigate them considerably,” Lufthansa Technik said.

Many of the contracts signed in 2020 were for specially developed crisis products, including solutions to temporarily convert passenger aircraft into auxiliary freighters as well as parking and storage services for decommissioned aircraft, engines or components. The global network for smart, on-demand engine repairs (Mobile Engine Services) was further expanded, including the addition of a new location in Dublin.

Demand for digital MRO services also went up. Lufthansa Technik reported that in December, more than 600 United Airlines aircraft were signed to the company’s ‘AVIATAR’ platform, which is now being used to collect additional data and develop further predictive maintenance solutions.

“The order from United Airlines was a real milestone for our AVIATAR platform,” said Dr. Bussmann. “Winning so many aircraft all at once is a great success in times like these. I’m optimistic that more will follow, because many airlines used the past year to take a close look at the digital future of technical fleet management. Our leading position in this market is thus another reason for me to look to the future with confidence.”

Lufthansa Technik launched its ‘RISE’ programme in the second half of 2020, with the goal of securing its leading position in the MRO market. To improve competitiveness, the company said it would introduce a “leaner and more efficient corporate structure adapted to the new challenges arising from the coronavirus crisis” that will be “able to accommodate the permanent changes in the MRO market”.

The number of product divisions will be trimmed from eight to five: Aircraft Component Services, Aircraft Maintenance Services, Digital Fleet Services, Engine Services and Original Equipment & Special Aircraft Services.

“Until the coronavirus crisis is under medical control, I can’t make a reliable assessment of when the aviation and MRO industries will recover their strength,” concluded Dr. Bussmann. “I also know that in taking the necessary measures, we’re asking a lot of our employees in these difficult times. But I’m firmly convinced that these measures will help us find the strength we need to emerge from the crisis successfully in the end.”