German gov’t approves $98.-B Lufthansa rescue
FRANKFURT AM MAIN (AFP) - Berlin will climb aboard airline giant Lufthansa as its largest shareholder in a nine-billion-euro ($9.8 billion) rescue if investors and competition authorities agree, as the coronavirus-stricken carrier faces an arduous years-long recovery from the pandemic.
Following the broad strokes of a scheme dangled last week, the economy ministry and Lufthansa said Monday the German government would offer a three-billion-euro loan and 5.7 billion of ''silent'' capital, as well as buying 20 percent of the company for 300 million euros.
If Lufthansa faces a hostile takeover, ''the economic stabilization fund (WSF) may also increase its stake to 25 percent plus one share,'' the company said, which would offer Berlin a blocking minority.
The final deal reflects concerns within the group and among conservative members of Chancellor Angela Merkel's coalition government about excessive, enduring government influence over the former flag carrier.
Berlin ''is not bringing state influence into Lufthansa's operational areas, quite the opposite. Lufthansa is a successful company and should be led by businesspeople in future as well,'' Economy Minister Peter Altmaier told reporters in Berlin.
Lufthansa will commit to repay the state's ''silent'' capital injection, plus interest, in exchange for the WSF selling its stake on the market by December 31 2023.
If Lufthansa fails to pay interest on the state's capital, Berlin would also be entitled to claim five percent of its shares.
The economy ministry said the deal included ''far-reaching limits on pay for board members at the parent company and subsidiaries as well as for management'', while Lufthansa spoke of a possible ''waiver of future dividend payments''.
The group had already suspended its dividend payout for 2019, saying that it needed cash on hand to weather the coronavirus storm.
And the state will also claim two seats on the supervisory board.
Required approvals from Lufthansa's executive and supervisory boards are widely seen as a formality.
That leaves sign-offs from shareholders – who must agree to any plan that would dilute their investments – and competition regulator the European Commission as the two final hurdles for the rescue.