Lufthansa Technik Breathes Easy Again

The pandemic saw declines across the world for Lufthansa Technik, including in its core European market.
Credit: James Pozzi/Aviation Week

It has been a turbulent few weeks for the world’s largest MRO provider, Lufthansa Technik (LHT), as a vital government-backed financing package for its parent airline hung in the balance.

Having put 12,000 employees—roughly half its staff—on short-time work, LHT awaited approval of a €9 billion ($10.1 billion) aid package from the German state to secure the future of its parent, and by implication itself.

This was progressing reasonably smoothly until mid-June, when the Lufthansa Group’s largest single shareholder, Heinz-Hermann Thiele, voiced misgivings about the deal and the extent of state oversight that would come with it.

Lufthansa immediately warned that a vote against the deal would push it to apply for bankruptcy protection – a move that would have made a sale of LHT more likely.

Even before that statement, there was talk of a partial IPO of the MRO arm once market sentiment improved but – in the end – shareholders voted for the financing package.

“The last weeks seem unreal to all of us,” said a relieved Johannes Bussmann, LHT’s chief executive.

“However, the stabilization measures of the German government give Lufthansa Technik a firm grip under our feet again.” 

Even so, planning now has to start on how to service a smaller parent fleet and compensate for the lost revenue that will entail.

In 2019 LHT’s revenue from parent company airlines was €2.5 billion, but this may represent a high watermark for internal business for some time to come since Lufthansa plans for its group-wide fleet to be 100 aircraft smaller after the crisis.

Thus the company’s focus going forward is likely to be on expanding its already impressive share of third-party business. In 2019 this amounted to sales of €4.5 billion, or 63% of total revenue.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.