Lufthansa has just passed a crucial new stage in its survival. On Friday, the German government and the European Commission agreed on the conditions for the rescue of the airline giant to 9 billion euros.
Leave more room for competition
To avoid bankruptcy, Lufthansa will notably have to leave more room for competition at its two main German airports. The compromise provides that the group will cede up to 24 take-off and landing slots, very coveted and precious rights for companies, representing 8 aircraft parked. These rights, divided equally between the airports of Frankfurt and Munich, will be reserved for "new competitors" for a year and a half before companies already present in these two cities can buy them if they are still available. "The slots should only be taken over by a European competitor who has not himself received public aid due to the coronavirus pandemic", specifies the German group.
To ratify the agreement, an extraordinary general meeting of shareholders must be convened "soon". They must indeed approve the rescue because it involves an increase in capital. But time is running out as the pandemic has brought global air transport to a virtual standstill. The cash reserves of the German group, which is losing a million euros per hour and currently only transporting 1% of the usual number of passengers, are only enough for a few weeks. He also does not expect a rapid reboot. It therefore launched a restructuring aimed at reducing its fleet of 100 planes, threatening around 10,000 jobs.
In addition, negotiations are continuing for the Belgian subsidiary Brussels Airlines, which announced in mid-May a plan to cut a quarter of its workforce, and Austrian Airlines, which has requested 767 million euros from Austria. Finally, Berne will guarantee 1.2 billion euros in loans to the Swiss and Edelweiss subsidiaries.
The German State enters the capital
In total, the rescue provides that the state will take 20% of the group for 300 million euros, in addition to injecting 5.7 billion euros of funds without voting rights, of which one billion can be converted into shares. It would be the first time that the German state would return to the capital of the company since its complete privatization in 1997. Berlin also reserves the right to increase its stake to 25% and one share, the blocking minority, but only "In the event of a third party takeover bid" or non-payment of interest.
Germany also guarantees a loan of 3 billion euros and obtains two seats on the supervisory board of Lufthansa, which is prohibited from paying dividends and paying bonuses to its leaders.
Nothing is yet completely won for the airline. Ryanair has already announced that it wants to challenge the plan before European justice, calling it "illegal state aid which will enormously distort competition".
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- Coronavirus
- Economy
- Transport
- Bankruptcy
- European Commission
- Airline company
- Germany
- Lufthansa