Rescue package: Lufthansa share gains via Tradegate: Lufthansa Supervisory Board accepts requirements for state aid | message

—“It was a very difficult decision,” said Karl-Ludwig Kley, chairman of the supervisory board, according to a press release on Monday after the panel meeting. Lufthansa has to hand over take-off and landing rights to the competition in Frankfurt and Munich. The general meeting still has to agree to this.

“We recommend our shareholders to follow this path, even if it requires them to make substantial contributions to stabilizing their company,” said Kley.

Investors appear to be following the call. On the Tradegate trading platform, Lufthansa’s share price temporarily rose by 4.44 percent to EUR 9.79. Resilient reactions from the stock exchange are not expected until Tuesday. There is no trade in Frankfurt due to Whit Monday.

Lufthansa shareholders are invited to the Annual General Meeting on June 25 – due to the corona pandemic via livestream. The notification by the Federal Government in Brussels and the formal approval of the EU Commission are still pending.

The rescue plan provides for the state economic stabilization fund to subscribe to shares in the course of a capital increase in order to build up a 20 percent stake in the airline’s share capital. In addition, silent deposits totaling up to EUR 5.7 billion and a loan of up to EUR 3 billion are planned.

CEO Carsten Spohr said, according to the message, the stabilization of Lufthansa is not an end in itself. “Together with the federal government, our goal must be to defend our leading position in global air traffic.”

The group has taken a big step further. At the last supervisory board meeting last Wednesday, the supervisory board had postponed the decision to accept the government bailout package for nine billion euros. The reason given by the company in Frankfurt was the possible conditions imposed by the EU Commission, which could check the take-off and landing rights at various airports in the event of state aid.

Shortly before Pentecost, it became known that the board wanted to accept a compromise on the conditions previously negotiated between Berlin and Brussels. This stipulates that Lufthansa must hand over 24 take-off and landing rights – so-called slots – to competitors at its most important airports in Munich and Frankfurt.

Slots are a major player in the industry – so negotiations for this number were tough: initially there were 20 aircraft with up to 80 slots, then the EU went down to just under 50 slots. Initially, Lufthansa only offered to temporarily do without 3 take-off and landing pairs. It has now been agreed on said 24 slots.

The more slots, the greater the market power: In the worst case, state aid for Lufthansa could, in the worst case, weaken competition in the market. EU Competition Commissioner Margrethe Vestager argues that ultimately, airline ticket prices may rise and consumers may suffer.

The situation is currently looking bleak not only for Lufthansa, but for the entire industry. Lockdown, travel warnings, citizens’ money worries: The corona crisis has hardly hit an industry as hard as aviation. With the exception of freight, Lufthansa businesses almost came to a standstill. In the group with around 138,000 employees, tens of thousands of jobs are on the brink.

The latest announcement by the Supervisory Board also does not give a rosy look into the future: “It is already foreseeable today that international air traffic will not reach the pre-crisis level in the coming years,” it says. Spohr suggests cuts: “The expected slow market recovery in global aviation makes it necessary to adjust our capacities. Among other things, we want to talk to our tariff and social partners about how the effects of this development can be cushioned as socially as possible.”

/ juc / DP / he

FRANKFURT (dpa-AFX)

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