Shareholders of the Lufthansa group voted Thursday in favor of the rescue plan for the German government's 9,000 million airline (which implies the return of the state to its capital for the first time since its privatization in 1997), after yesterday the European Commission give the green light to these public aids.

Shares of the company shot up 14.4% after the opening of the Frankfurt Stock Exchange after the airline's majority shareholder, Heinz Hermann Thiele, signaled that it is ready to approve the bailout.

Lufthansa was holding an extraordinary shareholders' meeting this Thursday morning to approve the aforementioned rescue plan, which was backed by 98% of the shareholder.

Doubts of the main laccionista

Heinz Hermann Thiele, owner of just over 15% of Lufthansa's capital, told the German press that he would vote in favor of the rescue at the extraordinary meeting.

Initially, the shareholder, one of the wealthiest men in Germany and controversial for his statements, had been reluctant for the German state to take a 20% stake in the airline, noting that other options could be explored. Specifically, he had pointed out that the entry of Berlin into Lufthansa's shareholding would avoid layoffs that he considers necessary for the survival of the company.

German Finance Minister Olaf Scholz has noted that "this is a good offer that the airline's shareholders should accept . " "Today is a decisive day for Lufthansa," he said. "This is more than 100,000 jobs and Germany's position in the global market," said Economy Minister Peter Altmaier.

This rescue is vital for the survival of the company, which, like the rest of the airline sector, suffers from serious liquidity problems as a result of the stoppage in the sector caused by the pandemic.

The sector, in crisis

The airline sector, in fact, was one of the first to cease its activity. Almost the entire European fleet was grounded after the closure of borders and stringent travel restrictions to try to contain the pandemic are having an irreparable impact on company activity and accounts.

Last week the Austrian airline Level Europe, of the IAG group, filed for bankruptcy . She was not the only one. In addition to Lufthansa, some of the large flag airlines in Europe have received public aid, such as Air France or KLM.

This injection of money by the states has been strongly criticized by companies such as Ryanair, one of the best facing this crisis because it has more liquidity, and which believes that these aids distort the market because airlines do not compete on equal terms. .

Ryanair will resort

In fact, the Irish woman has announced that she will take legal action against the decision of Brussels to approve this rescue. "We will appeal as soon as the full decision is published," Ryanair director of Legal and Regulatory Affairs Juliusz Komorek has warned, according to statements collected by German media.

In the case of Lufthansa, if the state bailout is not obtained, the group must declare insolvency. Lufthansa has agreed with the UFO flight attendants union saving measures of more than 500 million euros to overcome the economic effects of the coronavirus crisis.

Measures include suspension of salary increases, a reduction in flight hours, and other voluntary measures such as unpaid vacation or voluntary reduction in the workday. Other companies such as Swiss International, Brussels Airlines, Eurowings, Germanwings or Austrian Airlines depend on the Lufthansa group.

These measures are intended to prevent forced dismissals among the group's 22,000 cabin employees. Some companies, such as Iberia, are reorganizing their fleets to suit the circumstances, while others, such as Easyjet, have already announced layoffs.

Brussels Conditions

The European Commission yesterday approved the public aid that the German Government will give to Deutsche Lufthansa, the parent company of the German-flagged airline Lufhtansa. The plan includes 6,000 million in participations and a public guarantee for a loan of another 3,000 million.

This supposes the entrance of Berlin in the capital of the airline. "This aid comes with conditions , including ensuring that the state will be remunerated, and other measures to limit distortions in the market," said the vice president of the community executive responsible for competition, Margrethe Vestager.

Brussels has temporarily relaxed state aid rules to ease liquidity difficulties for European companies during the coronavirus.

Among the conditions demanded by Brussels is the transfer of several strips of take-off and landing rights (the so-called "slots") at the airports of Frankfurt and Munich, where Lufthansa has more weight than the rest of the airlines. The aim is to be able to make way for other competing airlines and avoid the German's dominant position.

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