Lufthansa Delays Decision on €9 Billion Government Bailout Amidst EU Demands

By Paul Riegler on 27 May 2020
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A Lufthansa 747-400 in Los Angeles

The Deutsche Lufthansa supervisory board said Wednesday that it will delay its decision on a proposed €9 billion ($9.89 billion) bailout from the German government, and that it will not immediately call for a shareholder vote on the proposal.

The German government said Tuesday that the bailout is necessary to help the airline survive an “existential emergency.”

The European Union wants the airline to give up German takeoff and landing slots, which Lufthansa said would weaken its hubs in Frankfurt and Munich.

Under the terms of the deal – which requires approval by the airline’s boards, shareholders, and the European Commission – the German government will take a 20% stake in the carrier and appoint two people to the company’s Aufsichtsrat or supervisory board. The Wirtschaftsstabilisierungsfonds or Economic Stabilization Fund of the German government, which will provide the funds, agreed not to exercise its voting rights except in the event of a takeover, at which point it would be allowed to increase its stake to 25% plus one share using part of the funds that were contributed as non-voting capital, giving it the ability to veto a deal.

The delay notwithstanding, the board said it sees the government bailout as “the only viable alternative for maintaining solvency,” given that the airline could run out of cash in a matter of weeks.

(Photo: Accura Media Group)

Accura News

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