Industry News: 26th May 2020
The German government threw Lufthansa (LHAG.DE
) a 9 billion euro ($9.8 billion) lifeline on Monday (25 May), agreeing a bailout which gives Berlin a veto in the event of a hostile bid for the airline.
The largest German corporate rescue since the coronavirus crisis struck will see the government get a 20 per cent stake, which could rise to 25 per cent plus one share in the event of a takeover attempt, as it seeks to protect thousands of jobs, according to a report by the Reuters news agency.
Lufthansa has been locked in talks with Berlin for weeks over aid it needs to survive an expected protracted travel slump, with the airline wrangling over how much control to yield in return for financial support.
Germany’s central government has spent decades offloading stakes in companies, but remains a large shareholder in former state monopolies such as Deutsche Post and Deutsche Telekom. Berlin also still has a 15 per cent holding in Commerzbank (CBKG.DE
), which it took on during the global financial crisis.
Other airlines including Franco-Dutch Air France-KLM (AIRF.PA
) and U.S. carriers American Airlines (AAL.O
), United Airlines (UAL.O
) and Delta Air Lines (DAL.N
) have also sought state aid after the coronavirus hit global travel.
Germany’s Finance and Economy Ministries said on Monday that Lufthansa, whose shares closed up 7.5 per cent at 8.64 euros, had been operationally healthy and profitable with good prospects, but had run into trouble because of the pandemic.