Swiss mother – Lufthansa rescue package on home stretch

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A decision on a billion dollar rescue package by the German government for Lufthansa is imminent. German Chancellor Angela Merkel said on Wednesday that it would be “coming soon”.

The government is in intensive talks with the company and the EU Commission. She could not give details of ongoing discussions, Merkel said. Lufthansa is the parent company of Swiss.

The negotiations on state aid for Lufthansa have not yet ended, according to the German government. “The talks are well advanced, but have not yet been concluded,” said a government spokesman for the German Press Agency on Wednesday evening.

Agreement on a joint proposal

According to dpa information, the government has agreed on a joint proposal for a rescue package. According to this, the federal government initially wants to acquire less than 25 percent of Lufthansa.

According to this, the federal government would not have a blocking minority – it could not block important strategic decisions. The German government is also to send two supervisory boards to the supervisory body.

According to information from the “Handelsblatt” and the DPA, Lufthansa’s liquidity is initially to be secured with a loan from the state-owned KfW Bank of EUR 3 billion. In addition, the state has a direct stake of 20 percent – as well as a convertible bond worth 5 percent plus one share.

Potential blocking minority

This construction should enable the state to set up a blocking minority in the event of an attempt at hostile takeover. The parties familiar with the negotiations told the DPA that the convertible bond could only be drawn under special conditions such as preventing a takeover.

The German government and Lufthansa have been negotiating state aid for weeks. According to dpa information, it was about a package of up to 9 billion euros. The modalities were long controversial in the coalition.

The Union, in particular, warned of the airline’s “quasi-nationalization”. The model of state participation of around 25 percent plus one share and thus a blocking minority was viewed very critically in the Union.

Liquid funds in descent

The Lufthansa Group threatens to run out of money. The company, like the entire industry, had been hit hard by the corona shock and is currently losing around EUR 800 million in cash per month. Of the allegedly available cash reserves of more than 4 billion euros, 1.8 billion euros actually belong to customers who are waiting for reimbursements for flights that have not been carried out.

In Switzerland, Parliament approved loans for aviation state aid on May 6. It wants to support Swiss with CHF 1.275 billion so that the Swiss airline and its sister Edelweiss can secure 1.5 billion loans from the banks. The parliament linked the state aid with additional environmental and social requirements.

(SDA / chk)

Published: 05/21/2020, 00:58-