Lufthansa closes in on $10 billion state rescue deal
Berlin, May 21
Lufthansa is in advanced talks over a 9 billion euros ($9.9 billion) state bailout that would see Germany take a 20% stake in its flagship airline, as countries battle to save an aviation industry hammered by the coronavirus pandemic.
Lufthansa said on Thursday a deal would involve the government taking two seats on its supervisory board, but it would only exercise its full voting rights in exceptional circumstances, such as to protect the firm against a takeover.
Lufthansa has been in talks with Berlin for weeks over aid to help it cope with what is expected to be a protracted travel slump, but has been wrangling over how much control to yield in return for support.
Sources involved in the negotiations said the government’s economic stabilisation fund had not yet put forward a final offer, but should do so on Thursday.
Rivals such as Franco-Dutch group Air France-KLM and US carriers American Airlines, United Airlines and Delta Air Lines have also sought state aid.
Lufthansa said it expected conditions of the deal to include the waiver of future dividend payments and limits on management pay, adding the package would have to be approved by the European Commission.
The plan includes a 3 billion euro loan from the state-backed bank KfW and a convertible bond, which could be exchanged for a further 5% stake plus one share in the event of a public takeover offer by a third party.
Lufthansa said it hoped the deal could be concluded promptly to secure its long-term solvency.
German media reported late on Wednesday that a deal had been done and Chancellor Angela Merkel said she expects an agreement on a rescue package soon, but did not elaborate. Reuters
