Germanwings crash and pilot strikes put Lufthansa in the red

Lufthansa will continue with deep cost cuts as it tries to put itself on a firmer footing

Germanwings Thomas Winkelmann, left, and Lufthansa CEO Carsten Spohr visited the crash site on Wednesday (AP)

Lufthansa, Europe’s biggest airline and the owner of the budget airline Germanwings, has warned that it will continue with deep cost cuts, as it tries to put itself on a firmer foundation.

The airline, which is still reeling from the deliberate crash of one of its passenger jets in March, said a long-running pay and pensions dispute with pilots was continuing to affect its performance.

The airline group, which also includes Swiss and Austrian Airlines, reported a first-quarter adjusted loss before interest and tax of €167m (£123m), slightly better than analysts had expected.

However, six strikes called between January and March cost the company €42m, and it said bookings were also weaker in the coming weeks, which was likely to add an additional €58m cost.

Like other airline groups in Europe, Lufthansa is trying to cut costs across the board so that it can compete with budget airlines and new rivals from the Gulf and Turkey.

Lower fuel costs helped the airline group’s position in the first quarter but the weak euro and rising pension expenses led to an increase in staff costs of 7 per cent.

Simone Menne, the company’s finance chief, said the company needed to urgently resolve the dispute over pensions with its pilots. It wants to switch staff to a less generous contributions-based system.

Talks between the company and its staff were suspended in the wake of the Germanwings disaster.

Candles lit for the victims outside the Germanwings HQ in Cologne following the disaster (Getty Images)

“We continue to see great pressure to act. The enormous pension burdens are putting considerable pressure on our equity. And we cannot accept the continuing increase in fees or the development of our unit costs,” she said.

Lufthansa’s first quarter was overshadowed by the downing of the Germanwings Airbus A320, which was crashed into a French mountainside on 24 March, killing all 150 passengers and crew.

There is evidence that the co-pilot, Andreas Lubitz, deliberately locked the captain out of the cockpit and steered the plane into the ground.

The tragedy hit Germanwings bookings for a short time, but the wider Lufthansa brand was not affected, the company said. Insurance is expected to cover the claims brought by the families of the victims.

Separately, Ryanair’s decision to improve its much-maligned customer service appears to be paying off, with the airline reporting a 16 per cent leap in passenger numbers in April, taking its total passengers for the month to nine million. The load factor, which measures how full its planes are, jumped from 84 per cent to 91 per cent.