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LUFTHANSA

Germany’s Lufthansa inches closer to €9 billion state bailout

Coronavirus-hit Lufthansa inched closer to securing a €9 billion bailout from the German government after the airline's supervisory board approved the rescue plan on Monday.

Germany's Lufthansa inches closer to €9 billion state bailout
Photo: AFP

The group will now ask shareholders to back the $10-billion deal in an online meeting on June 25, the company said in a statement.

Like its rivals, the Lufthansa group — which also includes Swiss, Brussels and Austrian Airlines — has been battered by the coronavirus pandemic that has brought global air travel to a near standstill.

Lufthansa's management board gave the proposed rescue deal its blessing on Friday, despite controversy over conditions imposed by the European Commission that will force the German group to give up prized takeoff and landing slots.

“After intensive discussion, we have come to the conclusion to agree to the executive board's proposal. We recommend that our shareholders follow this path,” said supervisory board chairman Karl-Ludwig Kley.

“It must be clearly stated, however, that Lufthansa is facing a very difficult road ahead.”

In Germany, a company's supervisory board oversees the work of the management board which runs the business day to day.

The bailout will see the German government take a 20-percent stake in the group, with an option to claim a further five percent plus one share to block hostile takeovers.

That would make the federal government Lufthansa's biggest shareholder. 

On top of a total €5.7 billion in extra capital and €300 million to buy the shares at face value, public investment bank KfW will lend Lufthansa another €3.

The company would agree to pay back much of the capital plus interest, while granting the state two seats on its supervisory board.

As well as requiring the green light from shareholders, the deal still needs be signed off by European competition authorities too.

“Stabilising our Lufthansa is not an end in itself. Together with the German government, it must be our goal to defend our leading position in global aviation,” Lufthansa CEO Carsten Spohr said in the statement.

With the airline industry bracing for a slow recovery, Spohr has warned the group likely has 100 too many planes and, in turn, 10,000 superfluous positions out of almost 140,000 jobs worldwide.

Lufthansa management will hold talks with union representatives on how “the impact of this development can be softened in the most socially acceptable way possible”, Spohr said.

Lufthansa is not the only airline turning to state aid to survive. 

Air France-KLM is set to benefit from €7 billion in emergency funding from the French government, with the Dutch state expected to add between two and €4 billion more.

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CULTURE

‘People liked the silence’: How Berlin’s club scene is struggling after lockdowns

Berlin's clubs are suffering from staff shortages, a lack of guests... and neighbours who've grown used to the silence, representatives for the scene say.

'People liked the silence': How Berlin's club scene is struggling after lockdowns

Some operators from Berlin’s club scene are bracing themselves for a difficult autumn. For months now, people have been allowed to dance again and life has returned to normal in the dark corners of Berlin’s famous nightlife scene.

But the clubs have far from recovered from the pandemic. They face staff shortages, rising prices and the prospect of a return to Covid restrictions in the autumn.

“We go into the autumn with huge fear, because the omens are totally unfavorable,” said association head Pamela Schobeß.

Spring and summer went anything but smoothly, she said. “There has been an oversupply of events. People aren’t going out as much, and some are still afraid to move around indoors.”

Money is also an issue. “A lot of people are afraid of rising energy prices.”

The industry lost workers during the pandemic and it’s hard to convince them to come back with the outlook for the autumn looking so gloomy, Schobeß says.

Her colleague Robin Schellenberg tells a similar story. People have switched to various other jobs and would even rather work on a supermarket checkout, which may have been considered less sexy in the past. Now, he says, some have learned to love not having to work nights.

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Schellenberg runs the Klunkerkranich, a small club on a parking garage deck in Neukölln. Because a number of things have become more expensive, they have also had to increase their admission prices.

His impression is that people are going out less often and are deciding more spontaneously. In addition, people in the neighborhood are now more sensitive to noise. “Many people found the silence very enticing,” he said.

Some in the industry wonder what will happen next. Will club admission have to become much more expensive? Will that exclude people who can no longer afford it? And what happens if Covid infection numbers rise sharply?

If masks become mandatory indoors in October, Schobeß believes that would be bad for the clubs. “Even if we don’t get shut down by the state, we’ll actually have to close down independently ourselves,” she reckons.

Masks take all the joy out of the experience, she says. People have drinks in their hands and are “jumping around and dancing” and then security guards have to tell them “please put your mask on.”

The federal government is considering whether states should be able to make masks mandatory indoors starting in October. Exceptions should be possible, such as at cultural and sporting events, for people who have been tested, recently vaccinated and recently recovered.

In the event that Covid numbers soar, the states could then be allowed to tighten the rules and eliminate all exemptions.

READ ALSO: German court declares techno to be music

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