Lufthansa in talks for partial nationalisation
Demands support worth €9b in exchange for 25% stake in company
PHOTO: AFP
FRANKFURT:
German airline giant Lufthansa confirmed Thursday that it is in talks for Berlin to offer support worth €9 billion ($9.7 billion) in exchange for a 25% stake in the company, as the coronavirus batters the world’s carriers.
The “stabilisation package” under discussion with the Federal Economic Stabilisation Fund (WSF) launched in March would include “a silent participation and a secured loan”, Lufthansa said.
“The conditions are currently being discussed. A stake by the German government in the company’s share capital is also part of the negotiations.”
A 25% stake in the group would put Berlin in a position to block decisions by Lufthansa management, allowing it to shape corporate strategy. Earlier Thursday, Economy Minister Peter Altmaier had told tabloid-style daily Bild Lufthansa was part of Germany’s “family silver” and that Berlin aimed to avoid a “fire sale” of valuable firms.
Meanwhile Bloomberg news reported that some members of Altmaier and Chancellor Angela Merkel’s centre-right CDU/CSU parliamentary group were holding up talks with opposition to a direct government stake in Lufthansa.
“The negotiations and the process of political decision-making are still ongoing,” the airline said in its statement.
Lufthansa Chief Executive Carsten Spohr has previously warned that the group is bleeding cash and might have to declare insolvency.
Like airlines worldwide, Lufthansa and its subsidiaries that include Swiss and Austrian Airlines have been essentially grounded and face an uncertain future once operations are fully up and running again. Around 700 of its roughly 760 aircraft are currently parked at airports and more than 80,000 of its 130,000 staff are on part-time work schemes.
The Social Democratic Party (SPD), junior partner in Merkel’s ruling coalition, has warned Lufthansa it cannot expect a blank cheque from Berlin.
Published in The Express Tribune, May 8th, 2020.
German airline giant Lufthansa confirmed Thursday that it is in talks for Berlin to offer support worth €9 billion ($9.7 billion) in exchange for a 25% stake in the company, as the coronavirus batters the world’s carriers.
The “stabilisation package” under discussion with the Federal Economic Stabilisation Fund (WSF) launched in March would include “a silent participation and a secured loan”, Lufthansa said.
“The conditions are currently being discussed. A stake by the German government in the company’s share capital is also part of the negotiations.”
A 25% stake in the group would put Berlin in a position to block decisions by Lufthansa management, allowing it to shape corporate strategy. Earlier Thursday, Economy Minister Peter Altmaier had told tabloid-style daily Bild Lufthansa was part of Germany’s “family silver” and that Berlin aimed to avoid a “fire sale” of valuable firms.
Meanwhile Bloomberg news reported that some members of Altmaier and Chancellor Angela Merkel’s centre-right CDU/CSU parliamentary group were holding up talks with opposition to a direct government stake in Lufthansa.
“The negotiations and the process of political decision-making are still ongoing,” the airline said in its statement.
Lufthansa Chief Executive Carsten Spohr has previously warned that the group is bleeding cash and might have to declare insolvency.
Like airlines worldwide, Lufthansa and its subsidiaries that include Swiss and Austrian Airlines have been essentially grounded and face an uncertain future once operations are fully up and running again. Around 700 of its roughly 760 aircraft are currently parked at airports and more than 80,000 of its 130,000 staff are on part-time work schemes.
The Social Democratic Party (SPD), junior partner in Merkel’s ruling coalition, has warned Lufthansa it cannot expect a blank cheque from Berlin.
Published in The Express Tribune, May 8th, 2020.