Lufthansa salvaged “in extremis”

Lufthansa sauvée de la faillite «in extremis»

Photo: Michael Probst Associated Press
The pandemic of COVID-19 has resulted in Lufthansa shutdown near-total passengers activities.

Céline Le Prioux – Agence France-Presse and

Yann Schreiber – Agence France-Presse

respectively in Frankfurt and in Brussels

June 26, 2020

  • Economy

The first group of european air transport, Lufthansa, has received Thursday approval for a bailout of 9 billion euros, which avoids the termination payment in the face of the coronavirus and will see the German return to his capital.

In a general meeting, the shareholders overwhelmingly approved the project to more than 98 % of the votes. A two-thirds majority was required. “We got there ! We’re going to get out ” now, was launched just after the chairman of the supervisory board of the German company, Karl-Ludwig Kley.

The outcome of this vote has long remained uncertain because of the reservations of the principal shareholder of the company, a German billionaire. The latter was reluctant to the idea of the German State to acquire at least 20 % of Lufthansa in the framework of this plan, for the first time since the full privatisation of the company in 1997.

In parallel, the european Commission, guardian of competition, has also announced that it validated the project, insisting on the conditions accepted in exchange.

“Lufthansa is committed to make available to “competitors” of the slots […] in its hubs in Frankfurt and Munich “, said the vice-president of the Commission, Margrethe Vestager. This is not enough, however, to the company at low prices Ryanair, which has announced that it will file an action in court.

To convince the shareholders, Lufthansa has reminded that the company, virtually nailed to the ground by the epidemic, was financially hard-pressed. “We have more money,” warned the chairman of the supervisory board. Without State support, Lufthansa would have to file the balance sheet within ” a few days “, he warned.

At the last moment

In the negotiations around the bailout plan, the main current shareholder, the German billionaire Heinz Hermann Thiele, who still holds 15.5 per cent of the capital, has played a pivotal role. It is only at the last moment on Wednesday night, as he has indicated that he will approve the assistance plan, while calling for a “restructuring” of the rapid company.

The pandemic of COVID-19 has resulted in Lufthansa shutdown near-total passengers activities ; at the peak of the crisis, the group lost € 1 million per hour. But even with the help of the public, the following looks complicated, because the restart will be very progressive : in September, it plans to offer always less than 60% of normal.

Eventually, the group will have a hundred planes of least on the 763 before the crisis, which has been nailed to the ground almost the entire fleet for nearly two months. To adapt to this prolonged decline, Lufthansa wants to remove 22 000 full time equivalent jobs, or 16% of the global workforce, half of which were in Germany, and is negotiating to this effect with the trade unions.

In respect of the various subsidiaries of Lufthansa, Austria was expected to assist Austria Airlines to the tune of 450 million euros, climb to the capital.

In Switzerland, Bern is going to guarantee $ 1.2 billion of loans to subsidiaries Swiss and Edelweiss, while the negotiations are continuing in Belgium, where Brussels Airlines is going to remove a thousand jobs.

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