FThe week started well for Heinz Hermann Thiele. He was able to record a success on Monday. The Federal Minister for Economic Affairs and Finance and the Chief Executive Officer of the country’s largest airline welcomed the billionaire and major shareholder in Berlin – three days before the most important general meeting in the history of Lufthansa.
At the virtual shareholder meeting due to the protective measures against the corona pandemic, it is up to the 79-year-old how to proceed with the airline. His stake package, which now totals 15.5 percent, decides whether the state can start as a rescuer with a nine-billion-euro package or otherwise have to file for bankruptcy. There may also be a third way. CEO Carsten Spohr simply speaks of a “fateful week for our Lufthansa”.
It’s about nothing less than the future of Europe’s largest airline group – who it belongs to in the future, who has the say, what it will look like. Above all, it is about the internal balance of power, the fate of 138,000 employees, at least 22,000 of whom will lose their jobs, and the continued validity of thousands of paid tickets worth around 1.8 billion euros.
The tremendous power of self-made billionaire Thiele rests on a detail the government wrote in the Corona Aid Act. Officially it is called the Economic Stabilization Acceleration Act, a word monster. It regulates the voting rates if the state joins a company and thereby excludes the subscription right of shareholders. With less than 50 percent presence, two thirds must agree. Only then does the simple majority apply. The appeals by the Lufthansa board of directors and the unions to the other shareholders to register in order to dampen Thiele’s power fizzled out. Only 38 percent are represented.
“A decision for the creditors’ committee”
Thiele now has a veto right against the planned state participation of at least 20 percent. If he says no, Lufthansa will soon be threatened with a special form of bankruptcy, bankruptcy in the protective shield procedure. This would allow Lufthansa to continue operating, but the general conditions would be renegotiated. From collective agreements to fuel contracts to cuts in protection against dismissal or pension obligations. It is based on the idea of debt relief for a company with future prospects and reducing costs.
Lufthansa is already sending signals of cost reduction. It has just been announced that the German company will be hired at the Sun Express holiday airline joint venture with around 1200 employees. Most recently, the airline operated together with Turkish Airlines had 20 aircraft. The Lufthansa subsidiary Eurowings and the Turkish Sunexpress are to take over the majority of the holiday airline’s flights in the future, according to a statement. The unions are also signaling that they are ready to cut costs.
Added to this is the uncertainty for customers. Should Thiele say no to the state entry and the saving billions for the empty Lufthansa ticket office, the thousands of Lufthansa customers would also have to worry about the value and validity of their tickets purely in terms of bankruptcy law. Although they paid for the trip, they were unable to use the tickets due to the Corona crisis with the flight stop. The down payments have a value of roughly 1.8 billion euros.
Thiele decision open at Annual General Meeting
Behind the scenes, legal experts are debating whether Lufthansa von Renommee could afford to spoil its customers and just prove the ticket value with an insolvency creditor quota. “That would be a decision for the creditors’ committee,” says an insider who wants to remain anonymous.
With the Condor holiday plane, the tickets remained valid under the protective shield procedure. This should also be the case with Lufthansa. However, there is an interesting detail. In the protective shield procedure, it would be legally questionable that passengers would have their tickets for unused trips paid out in cash. A voucher regulation would still be possible out of goodwill. The holiday plane Condor draws its customers’ attention to this special feature. Experts speak of the principle of equal treatment of creditors.
It is still unclear how Thiele will decide at the key general meeting. It would not be the first time that he gambled riskily to achieve his goals. The entrepreneur worked his way up from employee to CEO of today’s brake world market leader Knorr-Bremse. He also turned the medium-sized company into a global company through takeovers. Knorr-Bremse is worth 14.9 billion euros on the stock exchange – and Lufthansa, which just left the Dax, is only worth 4.7 billion euros.
According to her own information, Thiele only wants to decide shortly before the Annual General Meeting how he will vote and in this way coordinate with his advisors. It is a remarkable environment. A companion is, for example, the lawyer and longtime CSU politician Peter Gauweiler. In a laudation about the entrepreneur’s life, Gauweiler wrote in 2018: “Thiele knew no fear. Crises are opportunities. “
State gets shares for 2.56 euros
Gauweiler is tried and tested when it comes to the interests of entrepreneurs, as the ultimately successful struggle of Leo Kirch and his heirs against Deutsche Bank shows. Ex-Airbus CEO Thomas Enders is also to join the Knorr-Bremse Supervisory Board. Like Thiele, Enders is not a fan of state influence and a say in corporate decisions.
One of the special features of the virtual Lufthansa Annual General Meeting on Thursday is that shareholders there cannot speak. Questions had to be submitted beforehand. It starts at 12 noon and there is only one agenda item: the vote on the federal rescue package. In contrast to the last general meeting, Lufthansa does not publish the speech by CEO Spohr in advance.
Finance Minister Olaf Scholz and Economics Minister Peter Altmaier did not want to comment on the details after talking to Thiele on Monday. Thiele had said in advance that he wanted to renegotiate. It is not clear whether he has achieved anything. It was a friendly conversation and it was a good, balanced proposal, said the SPD politician Scholz afterwards.
Thiele judged it differently. If the state entered, its stake in Lufthansa would be watered down and the state would receive the shares at EUR 2.56, about a quarter of the current price. However, there are also warning voices. If the airline slips into a protective shield procedure, its share package could become worthless. He would also be the bogeyman in dramatic cuts. “Maybe he abstains from voting,” predicts one observer.