Lufthansa, German government agree on $9.8 billion rescue package

German flagship carrier hit hard by coronavirus pandemic

FRANKFURT - The German government and the management of flagship carrier Lufthansa, which has been hit hard by the coronavirus pandemic, have reached a preliminary deal on a nine billion euro bailout, two people close to the matter said.

The agreement is still pending approval by the German coronavirus rescue fund’s steering committee, which is expected to meet on Monday, as well as Lufthansa’s boards and the EU commission.

Lufthansa declined to comment. The German economy ministry said that negotiations were in their last phase but have not yet formally concluded.

The carrier said last week it was in advanced talks on a deal that would involve the government taking two seats on its supervisory board, but only exercising full voting rights in exceptional circumstances, such as to protect the firm against a takeover.

Lufthansa has been in talks with Berlin for weeks over aid to help it cope with what is expected to be a protracted travel slump, but has been wrangling over how much control to yield in return for support.

Rivals such as Franco-Dutch group Air France-KLM and U.S. carriers American Airlines, United Airlines and Delta Air Lines have also sought state aid.

Lufthansa has said it expected conditions of the deal to include the waiver of future dividend payments and limits on management pay.

The plan includes Germany taking a 20 per cent stake in Lufthansa. Germany will buy the new shares at the nominal value of 2.56 euros apiece, for about 300 million euros, a person close to the matter said.