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Sale and Lease Back

Lufthansa wants to sell and lease back hundreds of jets

Airlines keep their liquidity by selling and immediately leasing back aircraft. This was out of the question for Lufthansa in March. The state aid is now causing a change of direction.

Lufthansa/Oliver Roesler

Lufthansa aircraft: They shall guarantee liquidity.

In mid-March Lufthansa made its first detailed statement on the consequences of the emerging corona crisis. «We are certainly not selling our fleet,» said CEO Carsten Spohr at the time when asked whether he would sell and lease back aircraft. Chief Financial Officer Ulrik Svensson added that the company was the owner of 86 percent of the fleet. With a book value of around 10 billion euros, he said, the fleet was an important security for lenders.

A lot has changed since then. Svensson withdrew for health reasons and Lufthansa secured government aid in view of the ongoing corona crisis. In the coming years the group will be busy repaying loans plus interest – in Germany, Switzerland and probably also in Austria and Belgium. At the same time, it has to manage its cash.

Hundreds of planes for sale and lease back

And so the position on sale and lease back has also changed. This involves airlines selling aircraft and immediately leasing them again. This gives them fresh funds, but they have to pay running costs.

Lufthansa CEO Spohr said humorously exaggerated in a telephone conference with analysts and journalists on Wednesday (June, 3): «If anyone is interested in aircraft, call me, I have about 700». When asked by aeroTELEGRAPH, he explained that most of the aircraft owned by Lufthansa Group are eligible for sale and lease back. It would be around 500 jets, he said, Spohr.

Same capacity with 100 fewer aircraft

Lufthansa is also negotiating with Airbus and Boeing about later deliveries of new jets. This involves all aircraft types, both long-haul as well as short- and medium-haul, said Spohr. They are trying to delay deliveries as long as possible. Nevertheless, the company will receive at least 80 new jets by the end of 2023.

By that time, the Lufthansa Group has also set itself the ambitious goal of reducing its fleet by about 100 aircraft, but at the same time to offer a similarly high capacity as in 2019. How is this achievement to be accomplished? Lufthansa wants to sort out small aircraft and bring in large ones like the Airbus A350 and Boeing 777-9. For new short- and medium-haul jets, closer seating will provide more seats.

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