Coronavirus: German government agrees on €9bn Lufthansa rescue

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
07 April 2020, Munich: Parked Lufthansa aircraft stand on the airport apron. Due to the coronavirus crisis, Lufthansa will permanently decomission 42 jets of the core company Lufthansa and Eurowings. Photo: Matthias Balk//picture alliance via Getty Images)

The German government has agreed to extend a €9bn (£7.8bn, $9.7bn) lifeline to Lufthansa (LHA.DE) after the airline requested state aid to survive the economic fallout from the coronavirus pandemic.

According to Business Insider, which was the first to report the news (link in German), Lufthansa sources said that the government agreed the rescue package in return or one or two supervisory board mandates and a blocking minority.

The news outlet said that Lufthansa chief executive Carsten Spohr would meet German chancellor Angela Merkel and finance minister Olaf Scholz today to formally sign off on the package.

According to a report in Switzerland’s Tages-Anzeiger newspaper, Lufthansa subsidiary Swiss Airlines will receive a government-backed loan to the amount of CHF 1.5bn (£1.2bn, $1.5bn). The exact details of the rescue package are expected to be published on Wednesday this week.

Germany on Monday also agreed to extend €550m in state aid to holiday airline Condor, with economy minister Peter Altmaier noting that in normal times, Condor was operationally sound and profitable, with good future prospects.

Lufthansa’s bailout is many times bigger than Condor’s, of course, and members of the Christian Democrat-Social Democrat coalition government had argued over the conditions of the airline’s bailout in the past few days.

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The Social Democrat’s parliamentary leader said that if a company like Lufthansa is pumped full of taxpayer money, then the government should have a say in how it is run in the future.

Lufthansa is just one of many global airlines teetering on the verge of bankruptcy after worldwide travel was brought almost to a complete standstill by the coronavirus pandemic in March.

Virgin Australia went into administration last week. Currently, Virgin Atlantic major shareholder Richard Branson is reportedly trying to raise cash, and has approached more than 100 investors for funding.

The International Air Transport Association (IATA) on 14 April estimated that global airline losses from the impact of COVID-19 have reached $314bn so far this year, which is 25% more than it had previously predicted.

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