LUFTHANSA Technik Shannon has filed its annual report for 2020 which says a decision on the future of the company is likely before the end of the year, writes Owen Ryan.
The report stated the outcome of a strategic review process in relation to restructuring options being considered “represents a material uncertainty that may cast significant doubt over the ability of the company to continue as a going concern”.
Outlining the 2020 performance, the report said, “Turnover for 2020 at €51.5 million was lower than 2019 at €74.2 million”. The company’s profit for the financial year was €1.145 million, compared to €1.896 million in 2019.
“Average employee numbers were 505 in 2020, slightly up on the 2019 level of 476. Direct employee levels increased by 7% in 2020 compared to 2019. Administrative personnel levels also increased by 45 compared to 2019,” the report stated.
Regarding the future it said, “The company is currently undergoing a strategic review under which a number of strategic restructuring options are being considered in relation to the future of the company.
“This process has not been finalised at the point of approval of the financial statements. The base maintenance agreement with Lufthansa Technik AG, which has a 12-month termination clause, is in place at the date of the signing of the accounts.
“No change is likely to be made to this agreement until after the outcome of the strategic review of the restructuring options has been determined. The final decision on the future of the company is due to be determined before the end of 2021.
“The directors note that the outcome of the strategic review process in relation to the restructuring options being considered as set out above represents a material uncertainty that may cast significant doubt over the ability of the company to continue as a going concern.”
Regarding potential challenges ahead, it said, “The aircraft maintenance market has been impacted by Covid-19 but the list of competitors remains constant, particularly in Eastern Europe and the Middle East where labour costs are significantly lower than in Ireland.
“The key challenges for the company in 2021 are to improve efficiency and tackle the growing impact of seasonality on its operation as well as the impact of Covid-19 on overall workloads.”
The document also states Covid-19 had a serious impact.
“The sold man hours of the company are significantly impacted as a result of the impact that the Covid-19 pandemic has had on the aviation industry and these will continue to be impacted for a number of years with an expectation of normalised levels returning in FY23.
“However, notwithstanding the fact that there are reduced man hours, the company operates on a cost-plus agreement with the group and thus they will earn revenue and a margin on costs as they are incurred.
“Based on cashflow forecasts for 12 months from the date of approval of the financial statements, there is positive cashflow for the next 12 months.”