Lufthansa secures €9bn bailout from German government
Lufthansa was last night saved from collapse after securing a €9bn (£8bn) rescue deal from the German government.
The bailout, which is the largest German corporate rescue since the start of the coronavirus crisis, will see the government take a 20 per cent stake in the airline, which it intends to sell by the end of 2023.
The stake would rise to 25 per cent plus one share in the event of a hostile takeover, in a move designed to protect thousands of jobs.
The move comes after weeks of wrangling between Lufthansa and Berlin over how much control the airline was willing to give up in exchange for vital support to survive a slump in passenger demand during the pandemic.
“The support that we’re preparing here is for a limited period,” said finance minister Olaf Scholz.
“When the company is fit again, the state will sell its stake and hopefully… with a small profit that puts us into a position to finance the many, many requirements which we have to meet now, not only at this company.”
The deal, which will see the government buy roughly €300m worth of shares, requires Lufthansa to waive future dividends payments and place limits of executive pay.
The government will also take two seats on its supervisory board, including one member of the audit committee.
Under the bailout package Berlin will also inject €5.7bn in non-voting capital, known as a silent participation.
Part of this could be converted into an additional five per cent equity stake to protect Lufthansa from a hostile takeover.
Lufthansa will separately receive a €3bn three-year loan from state-backed KfW and private banks.