Rescue comes to a halt – the federal government makes new demands

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Lufthansa rescue is delayed

The federal government is demanding that Lufthansa renew its fleet and accept all aircraft ordered from Airbus.

(Photo: dpa)

Berlin, Frankfurt The rescue of the financially troubled airline Lufthansa is delayed. In the final phase of the talks, the federal government raised new demands that would make remediation almost impossible, informed circles reported to the Handelsblatt. According to this, Lufthansa should accept all aircraft that have been ordered from a European manufacturer. In fact, it’s all about Airbus, Boeing’s European rival.

This would be an enormous financial burden for Lufthansa, which has ordered dozens of aircraft from Airbus. Over the next three to four years, over five billion euros would be needed to take over the new aircraft, it said. The amount promised by the federal government of around nine billion euros would thus be significantly reduced. A rescue would no longer be economically viable, it said in the context of the negotiations.

Given this new burden, the representatives of the federal government and companies were unable to agree on the restructuring package. A Supervisory Board meeting scheduled for Friday was therefore postponed to Monday, it said. Lufthansa did not comment on this.

Like its competitors, the company is hit hard by the corona crisis. Because of the travel restrictions, the Lufthansa fleet has been on the ground for weeks, and the Group’s financial reserves are being used up. If the government and the group fail to come to an agreement within the next few days, then the bankruptcy of Europe’s largest airline is at risk.

“Nobody is interested in the scenario,” said a person familiar with the conversations. The federal and Lufthansa emissaries plan to continue negotiations over the weekend. It is indisputable that the federal government should receive a direct stake of 20 percent and a convertible bond worth five percent plus one share. The state could then effectively prevent hostile takeovers.

During the talks, however, a possible capital cut was discussed, the circles said. If this happened, the value of the shares would be reduced. So investors would have to accept a discount.

The biggest obstacle is the acceptance of the Airbus aircraft. The hope is that the demand will come from the table. Ultimately, the company will need at least 100 fewer machines, as the demand for flights is likely to decrease. The fleet will therefore shrink, as CEO Carsten Spohr has already made clear.

With the obligation to take over the aircraft, the Federal Government should above all keep an eye on the major political weather situation. The European Commission recently said that state aid must also take environmental protection into account, government circles said. A renewal of the Lufthansa fleet would help – new aircraft consume less fuel. Entry by the state must be approved by the EU Commission.

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