The German government has endorsed Lufthansa’s argument that it cannot survive if it must issue refunds for cancelled tickets.
Just last week the European Commission re-affirmed regulation that mandates airlines to promptly refund tickets for flight cancellations. Lufthansa, among others, has dragged its feet, arguing that it simply cannot afford it.
As demand continues to sink for flights, Lufthansa faces the same survival dilemma that others face: withhold refunds or run out of cash Bloomberg reports the carrier is thought to have €5.1 billion cash on hand and €4 billion in used ticket liability. If it were forced to refund that money, Lufthansa would run out of cash in 25 days.
With the German government now examining a bailout for Lufthansa, it wants the European Commission to allow airlines like Lufthansa to issue vouchers instead of cash. Thus far, Brussels is still insisting upon cash refunds and may levy fines against carriers who do not comply. But, the German request is currently under consideration.
Germany is exploring bailouts and loans to various companies and industries surpassing one trillion Euros across the German economy and wants to mitigate its direct risk concerning Lufthansa. It insists that mandatory refunds “threaten to bankrupt companies”.
Lufthansa, of course, applauds the efforts of the German government, also insisting that during this “exceptional time” refunds are simply not possible.
Count me as disappointed that Germany would take Lufthansa’s side in a move that negatively impacts consumers. It’s not like Lufthansa is the only entity suffering in this new world…last I checked, many consumers are as well. The move must come as a double-whammy to German taxpayers, many of whom will not receive refunds on cancelled tickets and then have their pockets fleeced via tax dollars by the very same airline.
With Canada and now Germany pushing for vouchers over refunds, will this be the new global trend?
> Read More: The Existential Airline Dilemma: Refund Or Survive