Lufthansa bailout hopes in hands of investors as board finally clears €9bn deal
The supervisory board of Lufthansa has approved Germany’s €9bn bailout proposal, paving the way for the airline to receive the lifeline should shareholders accept the deal.
With the carrier’s cash reserves dwindling, Lufthansa’s supervisory board voted in favour of the plan and called an extraordinary general meeting of shareholders for June 25.
The board’s approval was unexpectedly delayed last week after members balked at EU demands for slot disposals, a matter resolved in a deal sealed late Friday.
The spotlight now turns to the investors, who hold Lufthansa’s fate in their hands.
They face a choice between a capital hike that will dilute their own shareholdings or tipping Europe’s biggest airline toward insolvency.
Lufthansa’s management has told German government officials and labour representatives that it will run out of cash on June 15.
Lufthansa supervisory board chairman Karl-Ludwig Kley said it had been “a very difficult decision” involving “intensive discussion.”
“We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilising their company,” he said. “It must be clearly stated, however, that Lufthansa is facing a very difficult road ahead.”
With Lufthansa fighting for survival after the coronavirus fallout pushed revenues toward zero, Germany last week offered the carrier a package of loans and equity investment to keep it afloat.
But after the EU demanded it give up slots, the airline’s supervisory board unexpectedly held off on accepting the lifeline -- throwing the rescue plan into turmoil after weeks of talks.
This breakthrough comes after the German government agreed that Lufthansa will reduce its presence at airports in Frankfurt and Munich by four aircraft each. The accord would give a toehold to new competitors.
