The largest German airline can no longer.
According to insiders, Lufthansa plans to put together a government aid package of up to ten billion euros early next week. The reason: The corona crisis has swept the airline’s till.
Then it should also be clear what the distribution of equity and loans looks like, said several people familiar with the situation to the Reuters news agency.
The corona pandemic and the almost unused flight operations are bringing the airline billions in losses:
▶ ︎ From January to March, the minus widened to 1.2 billion euros within a year, as the group announced.
▶ ︎ For the current second quarter, the management around company boss Carsten Spohr still expects “a considerably higher operating loss than in the first quarter”.
The company’s rapidly declining cash is a major problem: “The Lufthansa Group’s liquidity is currently around 4.4 billion euros.” Spohr had recently emphasized that because of the crisis, Lufthansa was currently losing “around one million euros… liquidity reserves every hour” .
Because of the dwindling liquidity, negotiations are underway with several governments on state funds.
According to the insiders, this involves funds from the Federal Economic Stabilization Fund (WSF), funds from government-backed KfW loans and from the governments of Austria, Belgium and Switzerland. Lufthansa, the state development bank KfW and the federal government did not comment on this.
Verdi demands government aid
The deputy head of the service union Verdi, Christine Behle, demands state support for the battered airline.
“Without public money, Lufthansa has no chance,” said Behle to BILD. Otherwise, tens of thousands of jobs in Germany are at risk, warned the trade unionist, who is also Vice Chairman of the Supervisory Board of Lufthansa AG.
Behle therefore asked BILD to intervene quickly: “The state must support the group now – be it in the form of an active or silent participation.” The group had dealt well with its employees in the past, “such a company leaps and bounds would be completely inadequate. ”Lufthansa had recently got into financial difficulties due to the corona crisis, and the Federal Ministry of Economics confirmed to BILD on request that negotiations on possible government aid are currently being conducted with the group.
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Lufthansa wants silent participation
The bailout package amounts to nine to ten billion euros, as an insider said. The WSF could generate three to four billion euros in equity capital, initially possibly through a silent participation that could later be converted into parts or wholly into shares.
Up to five billion euros could flow from the KfW program, and one to 1.5 billion euros from the other countries together.
“The exact proportions of the individual financial pots are still in the flow,” said an insider.
Elsewhere it was said that in general one could also expect that the existing shareholders would have to bleed, for example by watering down their share packages. Because politically it is not enforceable to only give Lufthansa loans without participating in equity.
At Lufthansa, it was said at the end of the day that the case was for silent participation. Germany’s industry leader wants to prevent politics from interfering in the operational business.
Budget airline Ryanair is in a better position
The head of the Irish low-cost airline Ryanair, Michael O’Leary, is confident in the coronavirus pandemic.
“We went into crisis with almost four billion euros in cash on our balance sheet. Even if we don’t have any sales by the end of the year, we still have enough money, especially after support measures such as short-time benefits have been introduced in most EU countries, ”he told Handelsblatt.
At the same time, he ruled out applying for state aid and added: “We do not believe that any airline should receive state support.” It does not make sense to him why an airline still needs state aid if short-time work can be used.
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