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Lufthansa agrees bailout with German government

Christian Fernsby ▼ | May 25, 2020
The German government and Lufthansa have agreed on a much-anticipated bailout deal to help the airline cope with losses from the coronavirus pandemic, government sources told dpa on Monday.
Lufthansa A380
Germany   Lufthansa A380
The deal, thought to be worth up to 9 billion euros (9.8 billion dollars) is yet to be approved by Lufthansa's supervisory board and the European Commission's competition watchdog.

Topics: Lufthansa German

Lufthansa is facing the biggest financial crisis in its history due to the pandemic, which has grounded around 90 per cent of its planes. At one point the firm was losing about 800 million euros per month.

Passenger traffic ground to a virtual standstill from mid-March, though Lufthansa's freight business has continued to operate throughout the pandemic.

Government sources said the deal would be "within the framework" of a rescue plan that foresees the airline receiving a bailout totalling some 9 billion euros in exchange for a 20 per cent government-owned stake in the company.

The proposed deal was put forward by a government committee set up under legislation enacted in March establishing a fund designed to stablize the economy.

A key point in the talks held behind closed doors in recent weeks is that a government stake of this size would not give it a majority vote capable of blocking key decisions taken by Lufthansa management.

Another major issue is the status of some 138,000 employed by the airline and its many subsidiaries, which include Austrian, Brussels, Eurowings, Swiss and others, along with Lufthansa Cargo.

Chancellor Angela Merkel said last week that the government was in "intensive talks" not only with Lufthansa but also with the EU Commission.

Among the conditions likely to be set by competition authorities is the existence of an "exit strategy" for state involvement in the airline.

Earlier in the talks, Lufthansa chief executive Carsten Spohr held out the possibility of taking the airline, Europe's second largest by passenger numbers, into insolvency proceedings rather than accept state control.


 

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