The rescue package will give the government a 20% stake in the group, which has airlines in Germany, Austria, Switzerland and Belgium, and two seats on its supervisory board.
Lufthansa (DLAKY) said in a statement Monday that the German Federal Economic Stabilization Fund, which was used to help companies affected
coronavirus pandemic, has approved a “stabilization package,” which is supported by the company’s executive board.
The government is injecting up to € 5.7 billion ($ 6.2 billion) into the airline, resulting in returns that start at 4% this year and beyond before increasing. The package also includes a three-year credit facility of up to € 3 billion ($ 3.3 billion), most of which will come from Germany’s state-owned development bank, KfW.
In addition, the government will acquire 20% of Lufthansa’s shares at a price of € 2.56 per share ($ 2.79), or around € 300 million ($ 327 million). The government has the option to increase its ownership to 25% plus one share, allowing it to block any potential takeovers. He has agreed to sell his shares in full by the end of 2023, subject to full payment of an investment of $ 6.2 billion and a share price above the purchase price. Lufthansa shares, which are almost half this year, closed at € 8.64 ($ 9.41) in Frankfurt on Monday.
“Before the pandemic, the company was healthy and profitable and had good prospects for the future, but the company faced an existential emergency due to the current corona crisis,” the government said in a statement. “The federal government’s stabilization package takes into account the needs of companies as well as the needs of taxpayers and Lufthansa Group employees.”
Lufthansa, which recorded a first quarter loss of € 1.2 billion ($ 1.3 billion), did not expect global flights to recover from the pandemic for several years. The company closed its discount operator,
Germanwings, and plans to reduce 10,000 jobs.
Two seats on the Lufthansa supervisory board must be filled with agreements with the German state, the company said, one of which is a member of the audit committee. These seats will be allocated to “independent experts,” according to the government, which says financial support measures come with “extensive remuneration restrictions” for senior management.
The airline group may also be asked to release dividend payments in the future.
“Lufthansa is committed to pursuing sustainability goals, including renewing its fleet,” the government said, without giving further details about the environmental conditions associated with the bailout.
The French state-supported loan of € 7 billion ($ 7.6 billion) was provided to
Air France-KLM (EVERY) last month included
new commitment to cut absolute carbon emissions in half by 2024 in its domestic network, compared with 2019.
Lufthansa said the management and oversight boards would “gather soon” to adopt a rescue resolution package, which is subject to shareholder approval and regulations.
– Mark Thompson contributed reporting.
