The once profitable routes between Europe and the United States are currently unprofitable because most potential passengers cannot use them. There is no prospect of normalcy and a stock market magazine sees Donald Trump as the culprit.
The extremely critical situation in the United States in connection with the spread of the coronavirus could prove extremely detrimental for network carriers like Lufthansa. According to the specialist magazine “Der Aktionär”, airlines that rely on the hub-and-spoke concept are particularly suffering from the fact that the once highly profitable transatlantic traffic cannot be operated or can only be operated to a very limited extent.
The newspaper writes that the MDAX group Lufthansa was able to achieve the highest profit margins before the outbreak of the pandemic between Europe and the United States of America. With reference to Kranich boss Carsten Spohr, “Der Aktionär” reports that the demand on long-haul routes “turned out to be rather disappointing”. Within Europe, however, new bookings and occupancy rates are expected to exceed the original expectations, which were cautiously set low. According to Spohr, half of the long-haul aircraft are normally scheduled for transatlantic flights to the United States. He now hopes that traffic will normalize again from September 2020.
The trade magazine "The shareholder”Takes a completely different view in this context and points out that the behavior and decisions of US President Donald Trump are currently unpredictable and that his government has so far not been able to contain the pandemic even remotely. Furthermore, there are more new infections in the United States than in any other country in the world. In addition, Trump continues to forbid EU citizens from entering the USA and, conversely, the European Union has now put the United States on the list of undesirable entrants. As a result, there are currently only a few exceptions for airlines as customers, such as diplomats or non-EU citizens who transfer at a hub in the Union. However, long-haul flights cannot be operated profitably in this way.
The freight business between the two continents should have started well again, but passenger traffic will not really gain momentum as long as there are tough entry bans on both sides. There can be no high demand, because very few people buy a flight ticket that does not bring them much in the absence of entry authorization. The specialist magazine “Der Aktionär” is of the opinion that the transatlantic traffic will not normalize for a long time in view of around 50.000 new infections per day. It is believed that the situation in the United States will deteriorate rapidly. As a result, easing in travel is not foreseeable, and network carriers such as the Lufthansa Group are particularly likely to suffer from this, as the profitable business could fail for even longer.