Lufthansa to Get €9 Billion Bailout from German Government

By Kurt Stolz on 25 May 2020
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Deutsche Lufthansa said Monday that the airline and the Wirtschaftsstabilisierungsfonds or Economic Stabilization Fund of the German government have agreed on a €9 billion ($9.88 billion) bailout deal.

The government said the bailout is necessary to help the airline survive an “existential emergency.” It will take a 20% stake that it intends to sell by 2023. It will also inject €5.7 billion in non-voting capital, which is known as a “silent participation.”

The move, which follows weeks of negotiation, will preserve 100,000 jobs and “Germany’s leading position in aviation,” said Bundeswirtschaftsminister Peter Altmaier Monday

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 WSF 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 government will get an important business that is active across the globe, which is important in keeping the German economy competitive in the world,” said Altmaier in an interview on the ZDF news program Heute Journal.

People will begin to fly again and “we don’t want to abandon this lucrative market to Asian or Arab airlines,” he said.

Approximately one-third of the funds will come from the KfW, formerly known as the Kreditanstalt für Wiederaufbau or Credit Institute for Reconstruction, a financial institution created in 1948 as part of the Marshall Plan.

(Photo: Accura Media Group)

Accura News

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