Lufthansa shareholders vote yes to accept USD 10bn govt bailout
Lufthansa airline held a six-hour long virtual general assembly today in which shareholders formally voted "yes" to simply accept a USD 10 billion bailout bundle from the German federal government following the coronavirus crisis.
The result might not have come as a surprise following majority shareholder Heinz Hermann Thiele’s last-minute backing for the deal. He owns a 15.5 per cent stake.
“This is truly a fantastic general meeting,” noted Karl-Ludwig Kley, Chairman, Supervisory Plank, Lufthansa in his opening speech.
“It really is of historic influence. It’s importance reminds us of (Lufthansa’s) base in 1955, and privatisation in 1997. This special importance possesses been magnified by Heinz Hermann Thiele. He’s excellent with this agreement.”
The bailout includes USD 336 million equity participation through the registration of new shares by the state (corresponding to 20 % of the share capital).
Then you will find a USD 5.3 billion silent participation with the features of a non-convertible collateral instrument, and a USD 1.1 billion silent participation with the top features of a convertible debt device.
The stabilisation measures are supplemented by a syndicated credit facility as high as USD 3.3 billion with the participation of German talk about bank KfW and personal banks with a term of 3 years.
The recapitalisation is being financed by the Economic Stabilisation Fund (Wirtschaftsstabilisierungsfond), a special fund established by Germany to help German companies afflicted by the coronavirus outbreak.
As during the first-quarter earnings phone, on June 3, the airline emphasised that the deal really was a final resort.
But with the offer now finalised, Lufthansa will now look to cut some 26,000 careers across its different airlines and divisions, and it previously has a cost-saving programme set up.
“We've made most improvement with the air travel attendants union (UFO), and we'll reduce personnel device costs by 17 per cent… we are about course to conclude an identical arrangement with the pilots union,” explained Carsten Spohr, CEO, Lufthansa.
On the other hand, talks with the verdi trade union were “even more disappointing” and he explained the airline urgently had a need to progress in order to avoid making excess staff redundant through job cuts and involuntary layoffs. Nevertheless, Lufthansa has, finally, managed to buy more time.
