Airlines German Government grants financial helps for Lufthansa

The German Government has granted the economic stabilization fund for the country´s largest airline Lufthansa.

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Deutsche Lufthansa AG released, that it has been informed by the Economic Stabilization Fund WSF of Germany that the fund was approved. The executive board also supports the package. Due to the Coronavirus, the airline lost around EUR 1 million per hour.

This financial package provides Lufthansa Group with stabilization measures and loans of up to EUR 9 billion.

WSF explained: "The WSF will make silent participations of up to 5.7 billion euros in total in the assets of Deutsche Lufthansa AG. Of this amount, approximately EUR 4.7 billion is classified as equity in accordance with the provisions of the German Commercial Code (HGB) and IFRS. In this amount, the silent participation is unlimited in time and can be terminated by the company on a quarterly basis in whole or in part. In accordance with the agreed concept, the remuneration on the silent participations is 4% for the years 2020 and 2021 and rises in the following years to 9.5% in 2027."

In addition, WSF has added, that it will subscribe to shares by way of a capital increase in order to finally have a 20% stake in Deutsche Lufthansa AG. The subscription price will be 2.56 Euro per share. Overall, the cash contribution will amount to around EUR 300 million.

Lufthansa also stated, that the WSF could increase its stake to 25% if the company is being taken over. Furthermore, a portion of the participation shall be converted into an additional 5% shareholding, if a non-payment by the corporation is being exercised.

The second conversion option only applies when the WSF has not previously increased its shareholding in a take-over scenario. Conversion should also be possible for dilution protection, Lufthansa stated. WSF seeks to see its shareholding in full at market price by 31 December 2023.

"Finally, the stabilization measures are supplemented by a syndicated credit facility of up to EUR 3 billion with the participation of KfW and private banks with a term of three years. This facility is still subject to the approval of relevant bodies," Lufthansa concluded in a statement.

Two seats in the Supervisory Board of Lufthansa will be filled in agreement with the German government. On of the two is to become a member of the Audit Committee.

Lufthansa is the largest carrier in Germany and the group operates several airlines like Brussels Airlines, Eurowings, Swiss or Austrian Airlines. Lufthansa´s mainline fleet consists of nearly 300 aircraft, of which the most are currently parked during COVID-19.

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