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AFP
May 22, 2020

Lufthansa in $10bln rescue deal talks

Business

AFP
May 22, 2020

Frankfurt am Main: Lufthansa on Thursday confirmed it was in talks with the German government over a nine-billion-euro ($10 billion) rescue that will see Berlin take a massive stake in the coronavirus-stricken airline.

"The concept, which has not yet been finalised, provides for stabilisation measures in the amount of up to nine billion euros, of which three billion euros is in the form of a loan" from public investment bank KfW, the German aviation giant said in a statement.

Under the plans mooted with the federal government´s economic stabilisation fund (WSF), launched to cushion the impact of the virus pandemic, the WSF would acquire a stake of 20 percent in the airline group, as well as a convertible bond worth "a further five percent plus one share" in the company.

The bond "can be exchanged... in the event of a public takeover offer by a third party," giving Berlin a blocking minority.

If agreed, the solution would close weeks of wrangling over Lufthansa between Chancellor Angela Merkel´s CDU conservatives and their centre-left junior partners the SPD.

Lufthansa said that an extraordinary shareholder meeting would have to decide on the required capital increase, which would dilute the value of existing shareholders´ stakes.

In its role as competition watchdog, the European Commission must also give its blessing to the rescue before it can go ahead.

If plans go ahead, it would be the first time the government has held a stake in the former flag carrier since 1997. But around 700 of Lufthansa´s 760 aircraft are currently parked at airports and more than 80,000 of its 130,000 staff are on part-time work schemes.

In April, the group was carrying fewer than 3,000 passengers daily compared with a pre-pandemic average of around 350,000 a day.