Lufthansa’s debt priorities mean taking fewer Airbus jets

Bloomberg

Deutsche Lufthansa AG is unlikely to take delivery of all 80 of the jets it’s allowed to accept through 2023 under terms of
a $10.3 billion government bailout, according to a person familiar with the matter.
The German airline will instead prioritise quick repayment of the aid, said the person, who asked not to be identified discussing confidential matters. While the plans are in flux and depend on the pace of a travel recovery, any shortfall would be a setback for Airbus SE.
The European planemaker, also partly owned by Germany, is Lufthansa’s most important supplier and lobbied for stronger assurances that the airline would keep up plane deliveries, people familiar with the matter said.
The tension over orders shines a light onto the inner workings of one of Europe’s biggest airline bailouts, and the pressures that shaped decisionmaking on a drawn-out, white-knuckle process. When the coronavirus outbreak slammed air travel, airlines like Lufthansa —Europe’s biggest — saw revenue abruptly cut off and quickly descended into financial shock. The crisis soon rippled down to airframers Airbus and rival Boeing as carriers sought to delay or cancel orders.
With direct aid to Airbus politically sensitive because of ongoing trade disputes with the US, its biggest shareholders, the governments of France and Germany prioritised propping up their national carriers, Air France-KLM and Lufthansa.
By design, some of that money would flow through to suppliers like Airbus.
Lufthansa had 198 aircraft on order at year-end, of which 156 were for Airbus jets. During discussions on the airline’s rescue financing, the planemaker’s chief executive officer, Guillaume Faury, pressed his Lufthansa counterpart Carsten Spohr to take all Airbus aircraft on order through 2023, the people said. The German government acted as mediator, they said, resulting in a compromise memorialised in the aid package: Lufthansa would not cancel any aircraft orders, while it would accept a maximum of 80 aircraft during the period.
The airline elaborated earlier this month, setting a goal to halve spending on new aircraft through 2023. About three-fourths of those planes are from Airbus, its A320neo family of single-aisle workhorses and the modern A350 wide-body.