The state initiates its exit from the Deutsche Lufthansa group.

Surprisingly, the Federal Economic Stabilization Fund (WSF) wants to sell Lufthansa shares, which it had acquired in the course of state support in summer 2020.

The federal government confirmed on Monday the sale of a maximum of 5 percent of the Lufthansa shares, namely "over several weeks depending on market conditions", as announced by the Ministry of Economic Affairs under Peter Altmaier (CDU).

This reduces the state share from 20 to 15 percent.

Christian Geinitz

Business correspondent in Berlin

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Timo Kotowski

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A ministry spokeswoman assured the FAZ that the state was partially withdrawing from Lufthansa “while safeguarding the interests of the taxpayer”.

From the stabilization fund it was said: "After the first successes of the future-oriented measures introduced by Lufthansa, the WSF is adjusting its level of participation in a targeted manner, taking into account the interests of both sides."

First of all, the state makes a profit

The interest of the federal government should correspond to the fact that it achieves sales proceeds before the general election. In the summer of 2020, he bought the shares at the preferential price of 2.56 euros; on Monday the shares were quoted at around 9 euros. "It seems that the government wants to realize part of its enormous book profits before the election in September to show that taxpayers' money has brought a good return," the news agency dpa-AFX quoted a stock market trader as saying. For the state, there will probably initially be a sales profit of up to around 200 million euros.  

Lufthansa is also likely to be very interested in the move to advance its financial planning for the time after the Corona crisis. The group wants to carry out a capital increase in the near future. By issuing additional new shares, money is to flow into the group's coffers in order to repay government aid as quickly as possible. If the federal government, as the largest shareholder, were not to go along with this, it would send an unfortunate signal to the capital market from a group perspective. The announcement that the state is now surrendering 5 percent of its shares dropped the Lufthansa rate on Monday. The share was one of the biggest losers in the M-Dax.

With the sale of shares, the state gains leeway to acquire shares again without the threat of major hurdles under state aid law.

The income from the share sales could be used to accomplish the acquisition without additional funds.

The WSF also loses the agreed theoretical possibility of converting a silent participation into shares and thus building up a blocking minority of 25 percent.

In industry circles it is assumed that the federal government will participate in the capital increase to the extent that it will keep its stake stable at 15 percent and not allow it to be diluted.

There are no official statements yet.

Lufthansa wants to repay state aid quickly

Lufthansa CEO Carsten Spohr had set the goal of repaying state aid before the federal election at the end of September - with money from the capital increase. Due to the ongoing Corona crisis with travel restrictions and reservation reluctance, however, the market conditions are not ideal for bringing new shares of an airline to the market on a large scale.

Originally Lufthansa had probably planned to raise up to 3 billion euros, meanwhile people around the group have heard that they are now planning smaller with up to 2 billion euros.

Involvement of the WSF in the capital increase seems to have already been factored in.

Lufthansa does not comment on this when asked.

The Federal Ministry of Economics recalled on Monday that the federal government, through the WSF, played a key role in supporting Lufthansa with a total of 9 billion euros in order to secure the group and its more than 100,000 jobs in the Corona crisis.

Complex 9 billion euro package

In addition to silent participations, the public sector also acquired shares, but these were only "temporarily" from the start. The commitment was only "Corona-related" to temporarily help the traditional company, which is actually healthy. Another goal is "to maintain Germany's leading position in the world markets in civil aviation".

A 9 billion euro aid package was stoked for Lufthansa in the summer of 2020. The home countries of subsidiaries from Austria, Belgium and Switzerland contributed around 2 billion euros. Germany provided the majority. This includes a repaid loan from the state KfW bank of one billion euros. In addition, there were silent contributions from the WSF of around 5.7 billion euros, of which Lufthansa is currently claiming 2.5 billion euros, as well as the state purchase of shares.

The spokeswoman for Federal Economics Minister Peter Altmaier made it clear that the partial sale would not change the conditions for Lufthansa that had been agreed in the course of the stabilization.

This includes, for example, that neither dividends nor bonuses may continue to be paid.

The conditions only fall after the aid has been repaid.

This also includes the fact that Lufthansa is not allowed to participate in a consolidation in the aviation sector with significant takeovers for the time being.

Repayment also brings relief financially.

The group currently pays 4 percent interest for silent contributions from the WSF; in the coming year the rate will rise to 5 percent.

On the bond market, Lufthansa was recently able to raise money at lower interest rates of 2 and 3.5 percent respectively.