You are here
Lufthansa gears up for bailout showdown with investor
[FRANKFURT] Lufthansa will seek to avoid a grounding and insolvency, chief executive Carsten Spohr said on Sunday, before a showdown between the airline's biggest shareholder and the German government over the terms of a 9-billion-euro (S$14.05 billion) bailout.
Lufthansa has been hard hit by what is expected to be a protracted travel slump because of the Covid-19 pandemic, forcing it to seek a bailout.
Billionaire shareholder Heinz Hermann Thiele will meet the economics minister on Monday to discuss his objections to the state-backed bailout, a source close to the matter told Reuters.
As an alternative to the government taking a direct stake in Lufthansa, Mr Thiele has proposed an indirect participation through state-owned German development bank KfW.
In a letter to employees, Mr Spohr said the airline was in intense talks with the government and large shareholders which had "the clear goal of finding a satisfactory solution for our company and all participants before Thursday", when an extraordinary shareholder meeting will be held.
Expressing his desire to avoid a grounding or insolvency, he said: "I am sure this is an objective which unites all parties."
Lufthansa warned last week that a failure to secure shareholder approval for the bailout could force it to apply for protection from creditors under German insolvency law.
The bailout requires the support of more than two thirds of shareholders. Mr Thiele, who has 15.5 per cent of Lufthansa's shares, objects to the German state taking a 20 per cent stake and seats on its supervisory board.
Mr Spohr said shareholders representing 38 per cent of the company's capital had registered for the shareholder vote, handing Mr Thiele an effective veto if he does not endorse the proposed deal.
Lufthansa will pay June salaries on Monday, Mr Spohr said in the letter.
Lufthansa and Germany's finance ministry declined to comment on the meeting. Mr Thiele could not be reached for comment.