Lufthansa and Air France-KLM tighten budget amid first-quarter losses prompted by disruptions and strikes

Two of Europe’s most prominent airlines Lufthansa and Air France-KLM have announced their intentions of cost-cutting after first-quarter losses, Reuters has reported.

The financial troubles are said to have arose from high customer payouts due to flight distruptions and labour disputes.

Reuters highlights that the first-quarter is more often than not a loss-making one for many airlines, as a result of fewer bookings.

Despite so, this year’s first quarter was worse than expected “amid expensive strike action and disruption to capacity limits and cancellations.”

Looking ahead, Lufthansa stated that earnings in the second quarter would be below than those registered in the corresponding period of 2023, as customers were reluctant to book in April and May.

It should be noted that unprecedented circumstances such as higher costs and geopolitical turbulence have also had an effect on the airlines.

Air France-KLM said that it will reduce spending for the remainder of the year. This includes a halt in hiring support staff and a commitment to stabilise operations, especially at carrier KLM.

Similarly, Lufthansa will be pausing new projects and increase scrutiny on additional administrative staffing to strengthen the company’s savings.

During the first three months, the airline spent €350 million after agreeing to increase wages for staff and to make due for disruption costs from cancellations. Air France-KLM, on the other hand, paid customers €50 million euros due to operational challenges at its Dutch carrier.

Both airlines confirmed that they have completed their collective bargaining agreements and therefore do not expect further disruptions from strikes or labour talks until the remainder of the financial year.

Reuters noted that airlines are hopeful that the summer demand would provide a better outlook as Europe gears for one of its busiest travel seasons since the COVID-19 pandemic.

Despite the slow start, Lufthansa has shared that a strong summer season is in the works as bookings are up by 16  per cent compared with last year.