Lufthansa Group’s preliminary third-quarter results indicate that losses were less steep than in the previous quarter, which it attributes to an expanded summer flight schedule and “considerable cost reductions”.

The German airline group expects to post an adjusted EBIT loss of almost €1.3 billion ($1.5 billion) for the three months ended 30 September, after a €1.7 billion loss in the second quarter. In the third quarter of 2019, Lufthansa Group reported a positive adjusted EBIT of €1.3 billion.

Lufthansa Airbus A350-900 at Munich airport

It says it benefited from “strict working-capital management and the postponement of tax payments” during the third quarter of 2020, ending the period with net debt of €8.9 billion, compared with €6.7 billion at the end of last year.

The group had liquidity of €10.1 billion at the end of September, including undrawn funds from the €9 billion stabilisation packages provided by Germany, Switzerland, Austria and Belgium. Of those, €6.3 billion is still available.

Lufthansa says it is in a position “to withstand further burdens” from the coronavirus pandemic, and expects demand to remain low through the winter.

“According to current planning, the group’s airlines will only offer a maximum of 25% of the previous year’s capacity in the fourth quarter to ensure that flight operations continue to generate a positive cash contribution,” adds the group.

Bernstein analyst Daniel Roeska writes in a 20 October research note that “with €1.5 billion to €2 billion of cash burn per quarter on the high side and €150 million debt maturities in the next 12 months, the key question for 2021 will quickly zero in on the capex commitments Lufthansa will have to sustain”.

He expects that Lufthansa has enough cash to hand to make it to the summer, “but will need to see demand recovering by then to push the entire company into cash-contribution territory again, as current production levels will be unable to cover group overheads”.