Thursday, 7 May 2020

Lufthansa to get massive €9+ billion rescue package from the German government

Photo Lufthansa
Lufthansa confirmed today it was negotiating a stabilization package for €9 billion from the Federal Economic Stabilization Fund (Wirtschaftsstabilisierungsfonds - WSF) needed to finance the Lufthansa Group. 

The negotiations and the process of political decision-making are still ongoing, the firm confirmed, despite stories in some of the German press that the talks had ended. 

These negotiations include the German Government taking a significant stake in the group - up to a possible 25% of the whole firm and a silent secured loan.  In addition, conditions in accordance with the EU Temporary Framework and WSF Act are provided, including the waiver of future dividend payments. In addition, the WSF is seeking representation within the Supervisory Board.

CEO Carsten Spohr confirmed, "At the moment we are not only discussing the levels of the necessary amounts but are also negotiating the conditions and timelines as to when this help can be made available."  Although there was resistance at the AGM for a potential state stake in the firm as many believe it would fundamentally alter the way the airline is run.   

The Executive Board of Deutsche Lufthansa AG is continuing negotiations with the aim of ensuring the future viability of the company for the benefit of its customers and employees. However, regardless of the conditions attached to any such funding from the government, a massive reorganisation and reduction of the groups' operations will be needed, in addition to those already announced by Lufthansa and the other airlines in the group.  

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