Lufthansa’s €9bn state bailout wins shareholder backing
The vote secures the survival of Europe’s largest airline
Frankfurt — German airline Lufthansa won shareholder approval for a €9bn bailout from the government, securing the survival of Europe’s largest airline after weeks of drama over the rescue package.
About 98% of the airline’s shareholders at a special meeting on Thursday voted to approve the plan, according to chair Karl-Ludwig Kley.
“With your votes you have made a considerable contribution to our company’s future,” Kley said after announcing the results after the six-hour online meeting.
The bailout, which features the sale of a heavily discounted 20% stake to Chancellor Angela Merkel’s government, hung in the balance until Lufthansa’s biggest shareholder, billionaire Heinz Hermann Thiele, publicly backed it hours before the crunch vote.
Lufthansa plans to execute the sale of shares to Germany for €2.56 apiece, about one-third of the market price, in the coming days to unlock the financing. The airline warned that insolvency threatened soon if the package wasn’t cleared by shareholders.
Another step forward came earlier on Thursday, when European Union regulators approved the bulk of the package in exchange for Lufthansa making some slots available at its Frankfurt and Munich hubs.
The successful shareholder vote not only hands Lufthansa a lifeline but also saves Merkel’s government from a damaging defeat as it seeks to revive the country’s export-led economy.
In the process, Germany reasserted itself into the heart of a company that was privatised with fanfare two decades ago and links companies like Siemens AG and Volkswagen with operations about the world.
The approval of the German package opens the door for further aid already promised by Austria and Switzerland for operations in those countries. Belgium is also discussing funding.
Even with the state aid, Lufthansa will need deep restructuring to recover from the pandemic, which all but halted travel about the world. CEO Carsten Spohr has predicted that the airline will face years of depressed demand. The company expects its fleet to be 100 aircraft smaller after the crisis, implying the loss of more than 10,000 jobs.
Securing the bailout allows Lufthansa’s management to turn attention to negotiating concessions with the company’s powerful labour unions.
The company reached a deal late Wednesday with cabin crew that would save about€500m through 2023. In return, Lufthansa pledged not to make redundancies for the duration of the coronavirus crisis. A similar deal with pilots is close, Spohr said at the meeting.
The bailout offers the chance for the airline to rebuild its business, and “we can do it”, Kley said.