Decision on the Lufthansa base in Clare by the end of the year
LUFTHANSA Technik Shannon has filed its annual report for 2020 which indicates that a decision on the future of the company is likely before the end of the year, writes Owen Ryan.
The report said the outcome of a strategic review process regarding the restructuring options being considered “represents a significant uncertainty which may cast significant doubt on the ability of the company to continue as a going concern.”
Describing the performance for 2020, the report said: “The turnover for 2020 at 51.5 million euros was lower than 2019 at 74.2 million euros”. The company’s profit for the year amounted to 1.145 million euros, compared to 1.896 million euros in 2019.
âThe average number of employees was 505 in 2020, slightly up from the 2019 level of 476. Direct employee levels increased by 7% in 2020 compared to 2019. Administrative staff levels also increased increased by 45 compared to 2019, âthe report says.
Looking ahead, he said: âThe company is currently undergoing a strategic review where a number of strategic restructuring options are being considered in relation to the future of the company.
âThis process was not finalized when the financial statements were approved. The basic maintenance contract with Lufthansa Technik AG, with a 12-month termination clause, is in place on the date the accounts are signed.
âNo changes are likely to be made to this agreement until the outcome of the strategic review of restructuring options has been determined. The final decision on the future of the company must be made before the end of 2021.
“The directors note that the outcome of the strategic review process regarding the restructuring options being considered as noted above represents significant uncertainty which may cast significant doubt on the ability of the company to continue as a going concern.”
Regarding the potential challenges ahead, he said: âThe aircraft maintenance market has been impacted by Covid-19 but the list of competitors remains constant, especially in Eastern Europe and the Middle East where the costs of workforce are significantly lower than in Ireland.
âThe main challenges for the company in 2021 are to improve efficiency and combat the growing impact of seasonality on its operations as well as the impact of Covid-19 on overall workloads. “
The document also states that Covid-19 has had a serious impact.
âThe company’s sold working hours are significantly affected due to the impact the Covid-19 pandemic has had on the aviation industry and these will continue to be affected for a number of years. ‘years with an expectation of a return to normalized levels in fiscal year 23..
“However, despite the fact that the working hours are reduced, the company is operating on a cost plus agreement with the group and as a result, it will earn revenue and a margin on costs as they go. are incurred.
âBased on the cash flow forecast for 12 months from the date the financial statements are approved, there is positive cash flow for the next 12 months. “