German government moves to rescue Lufthansa bailout

FRANKFURT AM MAIN (AFP) – The German government leapt into action yesterday to rescue a proposed EUR9 billion (USD10.1 billion) coronavirus bailout for Lufthansa that has run into resistance from a billionaire shareholder.

Economy Minister Peter Altmaier and Finance Minister Olaf Scholz were holding crunch talks with Lufthansa representatives and a major shareholder, rail industry tycoon Heinz Hermann Thiele, sources told AFP.

A government spokesman declined to comment on the talks, but a Finance Ministry spokesman said Scholz has made clear that “the government has made a good proposal”.

The clock is ticking as Lufthansa shareholders are voting on Thursday on a rescue plan that would see Berlin take a 20 per cent stake in the company. But with shareholders representing just 38 per cent of Lufthansa’s capital registered to participate in the meeting, two-thirds backing will be needed to approve the plan rather than a simple majority if turnout were higher.

In a letter to employees on Sunday, Lufthansa CEO Carsten Spohr said the company had made “extensive preparations” should the deal fall through.

German Lufthansa planes at the airport in Frankfurt, Germany. PHOTO: AP

Like rival airlines, Lufthansa was plunged into crisis after efforts to contain the coronavirus pandemic brought air travel to a near standstill for several months, and the recovery is expected to be slow.

German billionaire Thiele has in recent weeks built up a 15 per cent stake in Lufthansa, making him the group’s largest single shareholder and raising fears he could block the government deal. Thiele told the Frankfurter Allgemeine Zeitung daily last week that his grab for shares was “not a signal that I will vote against anything”, but added that “not all the possibilities were exhausted” in bosses’ talks with Berlin. Thiele in particular objects to the state taking a stake in Lufthansa, and has pointed out that Air France-KLM received state aid in the form of loans rather than government shareholdings.

If Lufthansa’s shareholders reject the rescue package, the group could be forced to launch insolvency proceedings.