German airline Lufthansa is closing down its low-cost Germanwings division because of the crisis surrounding the spread of the COVID-19 coronavirus and the economic blockade. The airline is also decommissioning 40 aircraft, reducing the capacity of the Eurowings brand and accelerating the restructuring of its subsidiaries Austrian Airlines and Brussels Airlines.

The decommissioned passenger planes include six Airbus A380s, seven A340-600s, and five Boeing 747-400s. Eleven Airbus A320s, which are used for short-range connections, will also be landed. As a result, the capacity of Lufthansa in its main centers – Frankfurt and Munich – will be reduced.

The company outlined a rather pessimistic scenario last month in a note circulated to employees at one of the Lufthansa technical facilities in Ireland.

In a statement today, the company, which released nearly 90,000 people, said recovery would take months, and that by the end of the year, capacity would be three-quarters of that before the coronavirus crisis.

The statement says that it will take months until global travel restrictions are completely lifted, and years until global demand for air travel returns to pre-crisis levels.

The Frankfurt-based airline, which holds daily talks with the German government about rapidly declining liquidity, said in March it had credit lines in excess of 5 billion EUR. The carrier, which has cut 95% of its flights, also has a non-burdened fleet worth 10 billion euros, against which it can borrow more money.

“Lufthansa first reshaped its schedules in response to the spread of COVID-19 and is the first to essentially land the entire fleet”, commented analysts at Bernstein. “Obviously, the company is serious about claiming to be 20 percent smaller in the future”, analysts said.

At the same time, the unions have announced that negotiations are underway on the future of Germanwings staff, which also operates Eurowings. “We welcome any form of assistance”, commented the Verdi union, adding: “However, the logical conclusion is that state aid should only be granted if it is accompanied by employment and income”.

Lufthansa’s decision comes on the same day as the International Air Transport Association (IATA) warned that the recovery in demand for air travel would take longer than it had taken after previous economic and health shocks. The organization predicts a quarterly blockade of air travel, expecting a slowdown in growth due to the impact of the recession on society and business.