Business & Economy
FRANKFURT: The German government leapt into action Monday to rescue a proposed €9 billion ($10.1 billion) coronavirus bailout for Lufthansa that has run into resistance from a billionaire shareholder.
Economy Minister Peter Altmaier and Finance Minister Olaf Scholz were holding crunch talks with Lufthansa representatives and a major shareholder, rail industry tycoon Heinz Hermann Thiele, sources said.
A government spokesman declined to comment on the talks, but a Finance Ministry spokesman said Scholz has made clear that “the government has made a good proposal.”
The clock is ticking as Lufthansa shareholders are voting on Thursday on a rescue plan that would see Berlin take a 20 percent stake in the company.
But with shareholders representing just 38 percent of Lufthansa’s capital registered to participate in the meeting, two-thirds backing will be needed to approve the plan rather than a simple majority if turnout were higher.
In a letter to employees on Sunday, Lufthansa CEO Carsten Spohr said the company had made “extensive preparations” should the deal fall through.
Like rival airlines, Lufthansa was plunged into crisis after efforts to contain the coronavirus pandemic brought air travel to a near standstill for several months, and the recovery is expected to be slow.
German billionaire Thiele has in recent weeks built up a 15 percent stake in Lufthansa, making him the group’s largest single shareholder and raising fears he could block the government deal.
Thiele told the Frankfurter Allgemeine Zeitung daily last week that his grab for shares was “not a signal that I will vote against anything,” but added that “not all the possibilities were exhausted” in bosses’ talks with Berlin.
Thiele in particular objects to the state taking a stake in Lufthansa, and has pointed out that Air France-KLM received state aid in the form of loans rather than government shareholdings.
If Lufthansa’s shareholders reject the rescue package, the group — which also includes Swiss, Austrian and Brussels Airlines — could be forced to launch insolvency proceedings.
In his letter, Spohr said Lufthansa would continue to “discuss options with the government” until the very last moment and vowed to do everything necessary to avoid grounding the fleet again.
“Our goal of course remains to avoid insolvency and all its consequences,” Spohr wrote, adding that he felt a “great responsibility” toward Lufthansa’s 138,000 employees.
To ease some of the uncertainty, Spohr said Lufthansa was taking the unprecedented step of paying employees their June salaries several days early.
Shares in Lufthansa were down nearly 5percent at €9.67 in afternoon trade, the first day the firm was trading on the mid-sized MDax index after coronavirus-related losses edged it out of the prestigious DAX 30.