Comfort for Lufthansa after best shareholder backs rescue deal
25 June, 2020
Lufthansa's best shareholder on Wednesday said he'd back a 9 billion euro federal government rescue package, removing the risk of a last-minute veto that could include plunged the German airline into bankruptcy.
"I'll vote for the agreement," German billionaire Heinz Hermann Thiele told the Frankfurter Allgemeine Zeitung newspaper on the eve of a fantastic general meeting where shareholders will choose the fate of the coronavirus-hit giant.
Leader Carsten Spohr has warned that "the continuing future of the company" is at stake following the pandemic throttled Lufthansa's typical flood of passengers to a trickle for many months this year.
Spohr might address the web meeting set to commence in 1000 GMT, urging shareholders to back the plan he hammered out over weeks of talks with ministers and the European Commission.
The nine billion euro (US$10 billion) plan includes the talk about claiming a 20 percent stake.
Thiele, who built his fortune found in the rail and vehicle industries and owns 15.5 percent of Lufthansa's stock, had repeatedly voiced scepticism about the deal - to the dismay of Lufthansa management, employees and unions.
But he told the Frankfurt newspaper insolvency had to be avoided regardless if he nonetheless had doubts about the bailout, in a good nod to his issues about the government climbing on board.
"It really is in the interest of most Lufthansa employees that administration can easily begin talks about the necessary restructuring," Thiele said.
Even with the federal government aid, Lufthansa has said it could have to slash a large number of jobs as travelling demand is likely to stay under pre-pandemic levels for years.
But in another raise for the airline, it struck a deal with German trip attendants' union UFO later Wednesday to cut 500 million euros found in costs by 2023 while avoiding cabin crew layoffs.
The savings will be achieved through measures including pay freezes, reduced flight time, early retirement and unpaid leave, both sides said in a joint statement.
The deal still needs to be approved by union members.
But UFO spokesman Nicoley Baublies said it "gives urgently needed job security" for Lufthansa's 22,000 flight attendants as the business weathers an unprecedented crisis.
Lufthansa shares jumped a lot more than 16 percent at 2300 GMT in after-time trading as investors digested the most recent developments.
Veto power
Lufthansa's panel warned shareholders before Thursday's vote that insolvency was "unavoidable" if the bailout was rejected.
Considering that shareholders representing simply 38 percent of the capital have registered to participate, Thiele kept the power to singlehandedly torpedo the offer.
The 79-year-old's motivations for accumulating his own stake in Lufthansa remain murky.
"I will continue steadily to exert affect on the production of Lufthansa," he told the FAZ, declining to elaborate.
Bracing for a worst-case situation, Spohr on Sunday explained Lufthansa was "prepared" to keep flight businesses going regardless if the vote runs against the board.
Before launching insolvency protection techniques, bosses would "use the time to talk over alternatives with the federal government," he added.
The powerful Verdi union welcomed Thiele's green light.
"This ends an existential threat for almost 140,000 staff members globally and their own families," it said in a good statement.
"Other shareholders must today follow Thiele's case in point and consent to the rescue package."
Heavy weather
Lufthansa's climb out from the coronavirus storm promises to be long and arduous due to countries emerge from lockdown and flights slowly resumes.
By September, the group expects its timetable to stay 60 percent below levels seen before the pandemic.
Further into the future, around 100 of Lufthansa's present fleet of 763 aircraft is going to be surplus to requirements.
Somewhere else in the group, Vienna granted subsidiary Austrian Airlines aid totaling 450 million euros, while Swiss and Edelweiss received loans totaling 1.2 billion euros from Bern.
Talks continue with the Belgian authorities more than Brussels Airlines, which strategies to shed 1,000 jobs.
Source: www.thejakartapost.com
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